DECISIONS OF THE FEDERAL MARITIME COMMISSION

Second series

VOLUME 2 

January 2020 – December 2020 issuance

FEDERAL MARITIME COMMISSION, OFFICE OF THE SECRETARY, 2021 
Federal Maritime Commission

Washington, D.C. 

May 26, 2021 

Daniel B. Maffei, Chairman

Rebecca F. Dye, Commissioner

Michael A. Khouri, Commissioner

Louis E. Sola, Commissioner

Carl W. Bentzel, Commissioner

Office of Administrative Law Judges

Erin M. Wirth, Chief 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 legal prohibitions in the Shipping Act of 1984, 46 U.S.C. Chapters 

401-143. 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.

FACT FINDINGS

FF-29 International Ocean Transportation Supply Chain Engagement .................63

∗ Order, March 31, 2020.....................................................................................63

∗ Order, November 19, 2020.............................................................................221

FF-30 COVID-19 Impact on Cruise Industry..............................................................68

∗ Order, April 30, 2020.......................................................................................68

PETITIONS

P1-20; Docket No. 20-10 Investigation into Conditions Created by Canadian

Ballast Water Regulations in the U.S./Canada Great Lakes Trade........................107

∗ Notice of Investigation and Request for Comments,

June 16, 2020...................................................................................................107

P2-20; Petition of CMA CGM S.A., American President lines, LLC, APL Co. PTE.

LTD. and ANL Singapore PTE. LTD. For a Temporary Exemption from Standard 

Tariff & Service Contract Filing Requirements ........................................................ 193

∗ Order Granting in Part and Denying in Part Petition for Exemption, 

October 20, 2020 ..............................................................................................193

INFORMAL DOCKETS

1960(I) M/S. Parsons Overseas v. Seven Seas Shipping USA, Inc..............................1

∗ Order Affirming-in-Part and Vacating-in-Part Decisions on Remand

and Remanding for Discovery, December 12, 2019......................................1

∗ Order Granting Voluntary Dismissal, February 26, 2020..........................42

∗ Notice Not to Review, March 30, 2020 .........................................................62
FORMAL DOCKETS

14-15 Ngobros and Company Nigeria v. Ocean Cargo Link, LLC

and Kingston Ansah.......................................................................................................29

∗ Initial Decision Granting Voluntary Dismissal

of Proceeding, February 4, 2020 ....................................................................29

∗ Notice Not to Review, March 6, 2020 ...........................................................45

15-04 Crocus Investments, LLC and Crocus, Fze, v. Marine Transport Logistics, 

Inc. and Aleksandr Solovyev a/k/a Royal Finance Group Inc ............................... 224 

∗ Initial Decision on Remand, December 9, 2020

[Exceptions filed by Complainants, 12/31/20, Commission final decision pending] ...........224

16-16 Mavl Capital, Inc., Iam & Al Group Inc., and Maxim Ostrovsky v. Marine 

Transport Logisitics, Inc. and Dimitry Alper ........................................................... 202

∗ Memorandum Opinion and Order, October 29, 2020 ..............................202

17-02 Hangzhou Qianwang Dress Co., Ltd v. RDD Freight International Inc. ... 168

∗ Order affirming Initial Decision on Reman, September 1, 2020.............168

18-07 Marine Transport Logistics, Inc. v. CMA-CGM (America), LLC..................31

∗ Initial Decision Approving Confidential Settlement Agreement,

February 18, 2020.............................................................................................31

∗ Notice Not to Review, March 20, 2020 .........................................................46

18-10 Logfret, Inc. v. Kirsha, B. V., Leendert Johanness Bergwerff a/k/a Hans

Bergwerff, Linda Sieval..................................................................................................35

∗ Order Denying Respondents' Petition for Attorney Fees,

February 20, 2020.............................................................................................35

∗ Order Affirming Denial of Attorney Fee Petition,

June 22, 2020...................................................................................................110

19-03 Muhammad Rana v. Michelle Franklin,

d.b.a. “The Right Move Inc.”.........................................................................................70

∗ Initial Decision, May 12, 2020 ........................................................................70

19-08 Possible Revocation of Passenger Vessel Operator Performance Certificate

No. P1397 Great Northern & Southern Navigation Co., LLC

dba French America Line ..............................................................................................47
∗ Order Revoking Certificate (Performance), March 20, 2020 .....................47

19-09 VerTerra Ltd. v. D.B. Group America Ltd. and D.B. Group India Ltd.......102

∗ Initial Decision Approving Confidential Settlement Agreement,

June 12, 2020...................................................................................................102

∗ Notice Not to Review, July 14, 2020 ...........................................................136

20-03 Earlean Edwards Dukart v. Ocean Star International Inc.,

d/b/a International Van Lines .....................................................................................118

∗ Initial Decision Granting Voluntary Dismissal,

July 10, 2020....................................................................................................118

∗ Notice Not to Review, August 11, 2020......................................................165

20-04 Dip Shipping Company, LLC., Revocation of Ocean Transportation

Intermediary License No. 018752 ...............................................................................137

∗ Initial Decision Revoking Ocean Transportation

License, July 29, 2020 ....................................................................................137

∗ Notice Not to Review, August 31, 2020 .....................................................166

20-06 Temporary Exemption from Certain Service

Contract Requirements ..................................................................................................65

∗ Order Granting Exemption, April 27, 2020 .................................................65

20-08 Zero Waste Challenge, LLC v. Worldwide Freight Services, Inc.

d/b/a United American Line .......................................................................................106

∗ Notice of Voluntary Dismissal, June 15, 2020 ...........................................106

20-09 MAC Industries, Inc. d/b/a MAC Container Line v. COSCO

SHIPPING Lines Co., Ltd. ...........................................................................................161

∗ Initial Decision Approving Confidential Settlement Agreement,

July 29, 2020....................................................................................................161

∗ Notice Not to Review, August 31, 2020 .....................................................167

20-10; Petition No. P1-20 Investigation into Conditions Created by Canadian

Ballast Water Regulations in the U.S./Canada Great Lakes Trade........................107

∗ Notice of Investigation and Request for Comments,

June 16, 2020...................................................................................................107

20-11; Aeneas Exporting LLC v. Carlo Shipping International, Inc. ..................... 180
∗ Initial Decision Approving Settlement Agreement,

September 29, 2020 .........................................................................................180

∗ Notice Not to Review, November 5, 2020 ..................................................220

20-16 Notice Of Inquiry-Vessel-Operating Common Carrier Definition and

Application Of the Term “Merchant” in Bills of Lading ........................................ 187

∗ Notice of Inquiry, October 7, 2020 ...............................................................187
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.

Aeneas Exporting LLC v. Carlo Shipping International, Inc, 

Docket No. 20-11 ........................................................................................................... 180 

∗ Initial Decision Approving Settlement Agreement,

September 29, 2020 ......................................................................................... 180 

∗ Notice Not to Review, November 5, 2020 .................................................. 220

COVID-19 Impact on Cruise Industry, Fact Finding Investigation No. 30 ............ 68 

∗ Order, April 30, 2020 ....................................................................................... 68 

Crocus Investments, LLC and Crocus Fze v. Marine Transport Logistics, 

Inc. and Aleksandr Solovyev a/k/a Royal Finance Group Inc., 

Docket No. 15-04 ........................................................................................................... 224 

∗ Initial Decision on Remand, December 9, 2020 

[Exceptions filed by Complainants, 12/31/20, Commission final decision pending] ............ 224 

Dip Shipping Company, LLC., Revocation of Ocean Transportation

Intermediary License No. 018752, Docket No. 20-04 ............................................... 137 

∗ Initial Decision Revoking Ocean Transportation

License, July 29, 2020 .................................................................................... 137 

∗ Notice Not to Review, August 31, 2020 ..................................................... 166

Earlean Edwards Dukart v. Ocean Star International Inc., 

d/b/a International Van Lines, Docket No. 20-03 ..................................................... 118 

∗ Initial Decision Granting Voluntary Dismissal,

July 10, 2020 .................................................................................................... 118 

∗ Notice Not to Review, August 11, 2020 ...................................................... 165 

Hangzhou Qianwang Dress Co., Ltd v. RDD Freight International Inc.,

Docket No. 17-02 ........................................................................................................... 168 
∗ Order Affirming Initial Decision on Remand, September 1, 2020 ......... 168 

International Ocean Transportation Supply Chain

Engagement, Fact Finding Investigation No. 29 ........................................................ 63 

∗ Order, March 31, 2020 ..................................................................................... 63 

∗ Order, November 19, 2020............................................................................. 221

Investigation into Conditions Created by Canadian Ballast Water Regulations

in the U.S./Canada Great Lakes Trade, 

Docket No. 20-10; Petition No. P1-20 ......................................................................... 107 

∗ Notice of Investigation and Request for Comments,

June 16, 2020 ................................................................................................... 107 

Logfret, Inc. v. Kirsha, B. V., Leendert Johanness Bergwerff a/k/a Hans 

Bergwerff, Linda Sieval, Docket No. 18-10 ................................................................. 35 

∗ Order Denying Respondents' Petition for Attorney Fees,

February 20, 2020 ............................................................................................. 35 

∗ Order Affirming Denial of Attorney Fee Petition,

June 22, 2020 ................................................................................................... 110 

M/S. Parsons Overseas v. Seven Seas Shipping 

USA, Inc., Informal Docket No. 1960(I) ......................................................................... 1 

∗ Order Affirming-in-Part and Vacating-in-Part Decisions on Remand

and Remanding for Discovery, December 12, 2019...................................... 1 

∗ Order Granting Voluntary Dismissal, February 26, 2020 .......................... 42 

∗ Notice Not to Review, March 30, 2020 ......................................................... 62 

MAC Industries, Inc. d/b/a MAC Container Line v. COSCO

SHIPPING Lines Co., Ltd., Docket No. 20-09 ........................................................... 161 

∗ Initial Decision Approving Confidential Settlement Agreement,

July 29, 2020 .................................................................................................... 161 

∗ Notice Not to Review, August 31, 2020 ..................................................... 167

Marine Transport Logistics, Inc. v. CMA-CGM

(America), LLC, Docket No. 18-07 ............................................................................... 31 

∗ Initial Decision Approving Confidential Settlement Agreement,

February 18, 2020 ............................................................................................. 31 
∗ Notice Not to Review, March 20, 2020 ......................................................... 46 

Mavl Capital, Inc., Iam & Al Group Inc., and Maxim Ostrovsky v. Marine 

Transport Logistics, Inc. and Dimitry Alper, Docket No. 16-16 ............................ 202 

∗ Memorandum Opinion and Order, October 29, 2020 .............................. 202 

Muhammad Rana v. Michelle Franklin,

d.b.a. “The Right Move Inc.”, Docket No. 19-03 ........................................................ 70 

∗ Initial Decision, May 12, 2020 ........................................................................ 70

Notice of Inquiry-Vessel-Operating Common Carrier Definition and 

Application of the Term “Merchant” in Bills of Lading, 

Docket No. 20-16 ........................................................................................................... 187 

∗ Notice of Inquiry, October 7, 2020 ............................................................... 187 

Ngobros and Company Nigeria v. Ocean Cargo Link, LLC

and Kingston Ansah, Docket No. 14-15 ...................................................................... 29 

∗ Initial Decision Granting Voluntary Dismissal

of Proceeding, February 4, 2020 .................................................................... 29 

∗ Notice Not to Review, March 6, 2020 ........................................................... 45 

Petition of CMA CGM S.A., American President Lines, LLC, APL Co. PTE. Ltd. 

and ANL Singapore PTE. Ltd. for a Temporary Exemption from Standard Tariff 

& Service Contract Filing Requirements, Petition No. P2-20 ................................. 193 

∗ Order Granting in Part and Denying in Part Petition for Exemption, 

October 20, 2020 .............................................................................................. 193 

Possible Revocation of Passenger Vessel Operator Performance Certificate

No. P1397 Great Northern & Southern Navigation Co., LLC

dba French America Line, Docket No. 19-08 .............................................................. 47 

∗ Order Revoking Certificate (Performance), March 20, 2020 ..................... 47 

Temporary Exemption from Certain Service

Contract Requirements, Docket No. 20-06 .................................................................. 65 

∗ Order Granting Exemption, April 27, 2020 ................................................. 65 

VerTerra Ltd. v. D.B. Group America Ltd. and D.B. Group India Ltd.,

Docket No. 19-09 ........................................................................................................... 102 

∗ Initial Decision Approving Confidential Settlement Agreement,
June 12, 2020 ................................................................................................... 102 

∗ Notice Not to Review, July 14, 2020 ........................................................... 136 

Zero Waste Challenge, LLC v. Worldwide Freight Services, Inc.

d/b/a United American Line, Docket No. 20-08 ....................................................... 106 

∗ Notice of Voluntary Dismissal, June 15, 2020 ........................................... 106 
FEDERAL MARITIME COMMISSION

M/S. PARSONS OVERSEAS, Claimant

v. 

SEVEN SEAS SHIPPING USA,INC., Respondent. 

INFORMAL DOCKET NO. 

1960(I) 

Served: December 12, 2019 

BY THE COMMISSION: Michael A. KHOURI, Chairman, Rebecca F. DYE, Daniel B. 

MAFFEI, Louis E. SOLA, and Carl W. BENTZEL Commissioners. 

ORDER AFFIRMING-IN-PART AND VACATING-IN-PART DECISION ON REMAND AND 

REMANDING FOR DISCOVERY

I. INTRODUCTION

On July 9, 2018, the Small Claims Officer (SCO) found that Respondent violated 46 

U.S.C. § 41102(c) when it: (a) released Claimant’s cargo to an unauthorized party based on 

unauthorized bills of lading created by Respondent’s agent; and (b) misled Claimant about the 

status of the cargo. Decision at 23-24 (July 9, 2018) (SCO Decision). The Commission vacated 

that decision and remanded the matter to the SCO to determine whether Respondent’s acts or 

omissions occurred on a normal, customary, and continuous basis. Order Vacating and 

Remanding Decision at 2 (Mar. 7, 2019) (Remand Order). On remand, the SCO found that 

Claimant failed to establish that Respondent’s unjust and unreasonable acts or omissions met that 

standard and dismissed the claim. Decision on Remand at 19-20 (July 2, 2019) (SCO Remand 

Decision). 

Although the Commission disagrees with Claimant that applying the “normal, customary, 

and continuous” standard amounts to impermissible retroactive rulemaking, we believe that 

Claimant should have an additional opportunity to discover evidence about other shipments or 

other shippers relevant to whether Respondent or its agents engaged in the alleged unjust and 

unreasonable conduct on a normal, customary, and continuous basis. Consequently, the 

Commission vacates the SCO Remand Decision as to the normal, customary, and continuous 

issue and remands so that Claimant may discover evidence relevant to that standard.

II. BACKGROUND

This is a case between an apparel manufacturer/shipper (Claimant) and an ocean 

transportation intermediary (Respondent). SCO Remand Decision at 2. In September 2015, 

Claimant entered into a contract for the sale of apparel to a New York corporation called Prolink 

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2 F.M.C.2d
Industries, Inc. (Prolink) for $58,000. Id. Claimant cleared the goods through the Customs 

Authority in India, paid local port charges and, at Prolink’s instruction, tendered the goods to 

Respondent’s agent, Virat Global Logistics Pvt. Ltd. (Virat), to arrange for transportation of the 

cargo from India to the United States. Id.

On September 13, 2015, Virat issued an original bill of lading to Claimant for the 

shipment which identifies Claimant as the shipper/exporter, the consignee as “To Order,” Ocean 

Force Enterprises (Ocean Force), an entity related to Prolink as the notify party, and Prolink as 

the second notify party. Id. For unknown reasons, the agent also created two additional original 

bills of lading and issued them to Ocean Force. Id. The alternative bills of lading are identical to 

the originals, except that they identify Ocean Force as the shipper/exporter and Macy’s.com, Inc. 

(Macys) as the notify party. Id. at 2-3. 

While the goods were still in transit, Respondent received notification from Ocean Force 

that the goods had been sold to another company named Courage Clothing. Courage Clothing 

forwarded the alternate bills of lading to the Respondent. Id. at 3. When the cargo arrived,

Respondent did not notify Claimant of the arrival. The cargo was subject to an intensive customs 

examination and released to Respondent on October 12, 2015. After receiving the alternative 

bills of lading, Respondent released the cargo, in three installments, to Courage Clothing in 

October 2015, February 2016 and March 2016. Id. This occurred without Claimant’s knowledge.

In December 2015, Claimant inquired about the status of its shipment, and, despite the 

shipment having been cleared of customs in October, was informed by Respondent’s agent that 

the shipment was still undergoing a customs examination. In April 2016, Claimant learned that 

the shipment had been released to an unauthorized party. Claimant was only able to collect 

$10,000 of the $58,200 owed for the goods at issue. Id.

On March 6, 2018, Claimant filed a small claims complaint with the Commission seeking 

a reparations award for the $48,200 it was unable to recover from the buyer of its goods. Id.

Claimant alleged that that Respondent, an FMC-licensed ocean transportation intermediary 

(OTI), created unauthorized bills of lading and released Claimant’s cargo to an unauthorized 

party without obtaining the genuine bill of lading and misled the Claimant about the status of the 

shipment, all in violation of 46 U.S.C. § 41102(c). Id.

On July 9, 2018, the SCO issued a decision finding in favor of Claimant. The SCO found 

that Respondent created unauthorized bills of lading, misled Claimant about the status of 

Claimant’s shipment, and released Claimant’s shipment without the genuine endorsed original 

bill of lading required by the terms of the shipment and without Claimant’s authorization. SCO 

Decision at 22-23. The SCO found that each of these actions gave rise to a § 41102(c) violation 

and awarded reparations of $48,200. Id. at 26. On July 10, 2018, the Commission decided to 

review that decision.

While this review was pending, the Commission revised its interpretation of 46 U.S.C. 

§ 41102(c) and issued an interpretive rule reflecting that interpretation. Final Rule: Interpretation

of Shipping Act of 1984 – Unjust and Unreasonable Practices; 83 Fed. Reg. 64478 (Dec. 17,

2018). The Commission clarified that the proper scope of the prohibition against unreasonable 

practices in the Shipping Act of 1984 requires that a regulated entity engage in a practice or

2

2 F.M.C.2d
regulation on a normal, customary, and continuous basis. This interpretation brought the 

Commission’s understanding of section 41102(c) in line with earlier caselaw, which, as recently 

as 2001, “required that the unreasonable regulation or practice was the normal, customary, often 

repeated, systematic, uniform, habitual, and continuous manner in which the regulated common 

carrier was conducting business.” Id. at 64479. 

On March 7, 2019, the Commission vacated the SCO Decision, finding that the 

interpretation of § 41102(c) the SCO had applied – the “old” interpretation – runs contrary to the 

original intent of congress, the rules on statutory construction, and Commission precedent. 

Remand Order at 2. Citing the interpretive rule, the Commission found that the proper 

interpretation of the statute requires that the acts or omissions occur on a normal, customary, and 

continuous basis. Id. The Commission remanded the proceeding to the SCO to determine 

whether the acts or omissions at issue satisfied the “normal, customary, and continuous” test.

Following the remand, the SCO ordered the parties to file briefs discussing the revised 

§ 41102(c) standard and identifying relevant facts. Mar. 12, 2019 SCO Email. The SCO also 

gave the parties the opportunity to obtain evidence from each other. Id. The parties timely filed 

briefs but did not apply to the SCO for discovery. 

On July 2, 2019, the SCO issued a Decision on Remand finding in favor of the 

Respondent. SCO Remand Decision at 20. The SCO found that Claimant proved four of the five 

elements necessary to establish a § 41102(c) violation under the revised standard set forth in the 

interpretive rule but did not establish that Respondent’s unjust and unreasonable conduct 

occurred on a normal, customary, and continuous basis. Id. at 17-20. The SCO reasoned that 

while there was evidence of more than one instance of illegal conduct by Respondent, there was 

insufficient evidence that Respondent had a practice of creating fraudulent bills of lading, 

releasing shipments to unauthorized parties, or misleading shippers regarding the status of their 

shipments. Id. at 20; see also id. (“In other words, a ‘series of such occurrences’ has not been 

shown.”). On July 31, 2019, the Commission issued notice that it would review the SCO 

Remand Decision. 

III. DISCUSSION

A. Standard of Review

In proceedings, “[w]here exceptions are filed to, or the Commission reviews, an initial 

decision, the Commission, except as it may limit the issues upon notice or by rule, will have all 

the powers which it would have in making the initial decision.” 46 C.F.R. § 502.227(a)(6). Thus, 

when the Commission reviews a decision de novo it may enter its own findings. Kawasaki Kisen 

Kaisha, Ltd. v. Port Auth. of N.Y. & N.J., 33 S.R.R. 746, 753 (FMC 2014) (citing OC Int’l 

Freight, Inc., 33 S.R.R. 566, 570 (FMC 2014)). The Commission reviews SCO decisions in 

informal proceedings under the same standard. See Houbon v. World Moving Servs., 31 S.R.R. 

1400, 1404 (FMC 2010); see also 5 U.S.C. § 557(b). 

B. Retroactivity 

On remand the SCO found that Respondent was (a) an ocean transportation intermediary; 

(b) the acts or omissions at issue related to or were connected with receiving, handling, storing, 

 3 2 F.M.C.2d
or delivering property; (c) the acts or omissions at issue were unjust and unreasonable; and (d) 

the acts or omissions at issue were the proximate cause of the claimed loss. SCO Remand 

Decision at 18-19. These findings are supported by the evidence and we affirm the SCO Remand 

Decision in that respect.

The remaining question is whether the acts or omissions at issue occurred on a normal, 

customary, and continuous basis. In its brief on remand, Claimant argued that the Commission 

cannot lawfully apply the “normal, customary, and continuous” standard set forth in the 

Commission’s final rule in this case because the SCO issued the decision awarding Claimant 

reparations under the “old” § 41102(c) standard before the Commission announced its intent to 

revise the standard in a Notice of Proposed Rulemaking on September 7, 2018, and before the 

Commission adopted the revised standard in a Final Rule on December 17, 2018. Claimant Apr. 

11, 2019 Br. at 8-12. According to Claimant, the agencies cannot apply rules as the one at issue 

here retroactively. Id. The SCO declined to consider Claimant’s retroactivity argument, as it was 

bound by Remand Order to apply the normal, customary, and continuous standard. SCO Remand 

Decision at 17.

Claimant is correct that, generally, an agency cannot apply rules retroactively. Absent 

express Congressional approval, “agencies lack the power to promulgate retroactive legislative 

rules.” Health Ins. Ass’n of Am. v. Shalala, 23 F.3d 412, 422 (D.C. Cir. 1994) (citing Bowen v. 

Georgetown University Hosp., 488 U.S. 204 (1988)).1 But agency interpretations announced in 

adjudications typically are retroactive and apply in the cases in which they are announced. 

Health Ins. Ass’n, 23 F.3d at 424 (“Even if this reading had been novel, agency interpretations 

announced in adjudications typically are retroactive, and, subject to some limits, permissibly 

so.”); Clark-Cowlitz Joint Operating Agency v. Fed. Energy Regulatory Comm’n, 826 F.2d 1074, 

1081 (D.C. Cir. 1987) (en banc). 

Here, the Commission set forth the “normal, customary, and continuous” standard in its 

Remand Order and in so doing cited the Commission’s interpretive rule. Remand Order at 2. 

Any retroactive effect of the rule was “completely subsumed in the permissible retroactivity of 

the agency adjudication.” Health Ins. Ass’n, 23 F.3d at 424; see also id. (“Since HCFA was 

already free to subject Sentara-Hampton to the standard expressed in its 1983 revisions even in 

the absence of their promulgation as such, the Sentara-Hampton court correctly held that the 

interpretive rule itself was not being given retroactive effect.”);see also St. Luke’s Hosp. v. 

Sebelius, 611 F.3d 900, 907 (D.C. Cir. 2010) (finding that in context of agency adjudication, 

agency could lawfully interpret a regulation notwithstanding its retroactive effect and that the 

retroactivity of the application of a guidance document the agency issued while the case was 

pending was “subsumed in the permissible retroactivity of the agency adjudication”); 

Providence Health Sys. – Washington v. Thompson, 353 F.3d 661, 667 (9th Cir. 2003) (citing 

1The Commission disagrees, however, with Claimant’s contention that NLRB v. Bell Aerospace 

Co. Div. of Textron, Inc., 416 U.S. 267, 294 (1974) and Pfaff v. United States HUD, 88 F.3d 739, 748 (9th 

Cir. 1996), give rise to a presumption that bears on the application of the standard here. The cited portion 

of Textron stands for the proposition that an agency has discretion in deciding how it announces new 

principles. 416 U.S. at 294. And Pfaff involved an agency standard that imposed penalties, injunctions, 

government surveillance, and potential damages on noncompliant parties. 88 F.3d at 748. As discussed 

below in Part III.C., the Commission’s revised interpretation of § 41102(c) does not penalize Claimant in 

a manner that creates a manifest injustice.

 4 2 F.M.C.2d
Health Ins. Ass’n). The SCO therefore did not impermissibly apply a rule retroactively when it 

(at the Commission’s direction) applied the “normal, customary, and continuous” standard to his 

case on remand.

Moreover, the Commission could have reached the same result – announcement of a 

revised § 41102(c) standard – without promulgating a rule at all. As the D.C. Circuit reasoned: 

Indeed, in the context of internal adjudicatory procedures, to hold that agencies 

can apply their new interpretations of pre-existing statutes or regulations 

retroactively only if they do not memorialize those interpretations in interpretive 

rules would create a perverse disincentive to issue such rules. The ironic result 

would be that entities affected by the agency’s interpretations would be left more 

in the dark than before, for clues to the agency’s reading of the relevant texts 

would emerge only on an ad hoc basis. And this even though an ad hoc answer 

developed in binding agency adjudication would enjoy judicial deference.

Health Ins. Ass’n, 23 F.3d at 424-25. The Commission here decided to give the public advance 

notice and an opportunity to comment with respect to the interpretation of § 41102(c). Having 

done so, the Commission is not precluded from applying that interpretation going forward, even 

as to this case.2

C. Manifest Injustice

The Commission also finds that applying the “normal, customary, and continuous” 

standard in this case does not work a manifest injustice to Claimant. In considering whether a 

“retrospective application” of a rule announced in an agency adjudication should be withheld 

because it is a manifest injustice, courts consider:

(1) whether the particular case is of first impression, (2) whether the new rule 

represents an abrupt departure from well established practice or merely attempts 

to fill a void in an unsettled area of law, (3) the extent to which the party against 

whom the new rule is applied relied on the former rule, (4) the degree of the 

burden which a retroactive order imposes on a party, and (5) the statutory interest 

in applying a new rule despite the reliance of a party on the old standard. 

Clark-Cowlitz, 826 F.2d at 1081 (quoting Retail, Wholesale & Department Store Union v. NLRB, 

466 F.2d 380, 390 (D.C. Cir. 1972). Here, on balance the factors weigh against invoking the 

2 Contrary to Claimant’s argument, Claimant Apr. 11, 2019 Br. at 11, the Notice of Proposed 

Rulemaking and Final Rule do not imply that the interpretive rule would not apply to cases pending 

before the Commission for review. The Notice of Proposed Rulemaking and Final Rule are silent on that 

issue. The statement that the Commission will “[i]n the future” apply the revised standard does not 

mention pending cases. 83 Fed. Reg. at 45370. Moreover, the Commission has acted consistently with 

that statement by applying that standard to all cases once the Final Rule issued, including the present case. 

The effective date of the Final Rule and the statement that the revised interpretation “will return” the 

Commission’s approach to consistency with precedent likewise do not suggest anything about pending 

cases.

 5 2 F.M.C.2d
“manifest injustice” exception to the normal rule permitting retroactive application.

The first factor “recognizes that a number of reasons call for the application of a new rule 

to the parties to the adjudicatory proceeding in which it is first announced.” Clark-Cowlitz, 826 

F.2d at 1081-82 (internal quotation marks and citation omitted). Courts have also recognized that 

“by granting the benefit of a change in the law to those who efforts may have helped bring about 

the change, retroactive application of a new principle encourages parties to advance new theories 

or challenge outworn doctrines.” Retail, Wholesale, 466 F.2d at 390. This is not a case in which 

the revised § 41102(c) standard is first being announced, and the Respondent here did not help 

bring about the change in interpretation. This factor therefore weighs in favor of the manifest 

injustice exception.

The second factor also weighs in favor of the manifest injustice exception and against 

applying the “normal, customary, and continuous” standard to the present case, but it does not 

weigh heavily. The second factor “requires the court to gauge the unexpectedness of a rule and 

the extent to which the new principle serves the important but workaday function of filling in the 

interstices of the law.” Id. at 1082. It “recognizes that the longer and more consistently an agency 

has followed one view of the law, the more likely it is that private parties have reasonably relied 

to their detriment on that view.” Id. at 1083. 

Here, the revised interpretation of § 41102(c) expressly departs from a line of established 

Commission caselaw. 83 Fed. Reg. at 45367. It does not fill gaps of the law but resulted from a 

change in agency policy. Clark-Cowlitz, 826 F.2d at 1083. This factor does not weigh that 

heavily against the general rule of retroactivity in adjudications, however, because the “old” 

interpretation was not that old. 83 Fed. Reg. at 45367. Commissioners also consistently dissented 

from Commission orders applying the old interpretation. E.g., Kobel v. Hapag-Lloyd A.G., 32 

S.R.R. 1720, 1744 (FMC 2013) (Khouri, Commissioner, dissenting). 

The third factor asks if the party against whom the new rule is applied, in this case 

Claimant, relied on the former rule. There appears no evidence that Claimant relied on the “old” 

interpretation of § 41102(c). Claimant certainly litigated its case under the old § 41102(c) 

interpretation, and the SCO found liability under that standard. Claimant also asserts in its brief 

that it relied on precedent applying the “old” standard when it submitted its complaint. Claimant 

Apr. 11, 2019 Br. at 11. But there is no evidence that Claimant conformed its conduct to a 

Commission rule and is now being punished under a new rule. There is no evidence, for instance, 

that in shipping clothing from India to the United States, Claimant was relying on the fact that it 

could later possibly seek recovery under § 41102(c) for a single act or omission. In contrast, in 

Retail, Wholesale, the company against whom a new rule was applied had previously conformed 

its conduct to a well-established and long-accepted standard, and the agency was “attempt[ing] to 

punish conformity to that standard under a new standard subsequently adopted.” 466 F.2d at 391. 

The lack of “punishment” is also key to the fourth factor, the degree of burden that 

retroactive application would place on a party. By applying the revised interpretation of § 

41102(c), the Commission is not burdening Claimantsuch that there is a manifest injustice. 

Claimant might find it more difficult to prove liability under the “normal, customary, and 

continuous” standard than under the prior standard. But “[t]he ‘situation is not one in which 

some new liability is sought to be imposed on individuals for past actions which were taken in 

 6 2 F.M.C.2d
good-faith reliance on agency pronouncements.” Clark-Cowlitz, 826 F.2d at 1085-86 (quoting 

NLRB v. Bell Aerospace Co., 416 U.S. 267, 295 (1974)). Nor is this a situation where the 

application of the revised interpretation is increasing the likelihood that parties will be fined or 

pay damages. Id. (“Nor are fines or damages involved here.”). It is also of little significance that 

Claimant initially obtained a favorable SCO ruling because the Commission may review an SCO 

decision de novo. See 46 C.F.R. § 502.304(g); Part III.A., supra; see also Clark-Cowlitz, 826 

F.2d at 1085 n. 10 (“All Clark-Cowlitz ever had was a favorable ruling from an ALJ, which was 

subject to plenary review by the full Commission.”).

The fifth factor, which considers the statutory interest in applying the revised 

interpretation does not seem to weigh particularly in either direction. Among the purposes of the 

Shipping Act is to establish a nondiscriminatory regulatory process for ocean common carriage, 

46 U.S.C. § 40101(1), and the “primary objective of the shipping laws administered by the FMC 

is to protect the shipping industry’s customers, not members of the industry,” N.Y. Shipping 

Ass’n v. Fed. Mar. Comm’n, 854 F.2d 1338, 1374 (D.C. Cir. 1988) (quoting Boston Shipping 

Ass’n v. Fed. Mar. Comm’n, 706 F.2d 1231, 1238 (1st Cir. 1983)). But there is also an interest in 

minimizing government intervention in the industry, 46 U.S.C. § 40101(1), and in the 

Commission focusing on activities (i.e. practices) that “negatively affect the broader shipping 

public,” 83 Fed. Reg. at 45367, which both counsel against continuing to applying an “old” 

statutory interpretation that is more expansive than the Commission deems appropriate. 

D. Opportunity for Discovery

Although the Commission believes application of the “normal, customary, and 

continuous” standard is appropriate, we recognize that this was not the interpretation of § 

41102(c) when Claimant filed this case and when the SCO Decision was issued in Claimant’s 

favor. As a consequence, Claimant would not have anticipated the need for evidence relating to 

Respondent’s conduct with respect to other shipments or shippers. Moreover, Claimant’s brief in 

response to remand focused on retroactivity, and it did not apparently avail itself of the 

opportunity to take discovery.

Given the procedural posture and timing of this case vis-à-vis the revised interpretation of 

§ 41102(c), the Commission will give Claimant a final opportunity to seek discovery relevant to

the “normal, customary, and continuous” standard. Because this is an informal proceeding under 

Subpart S of 46 C.F.R. Part 502, and discovery is not normally permitted, the SCO has the 

discretion to determine how best to permit any additional taking and submission of evidence. 

The Commission takes no position as to the SCO’s application of the “normal, customary, and 

continuous” standard to the evidence previously submitted.

IV. CONCLUSION

For the reasons set forth above, the Commission AFFIRMS the SCO’s finding on 

remand that Respondent was (a) an ocean transportation intermediary; (b) the acts or omissions 

at issue related to or were connected with receiving, handling, storing, or delivering property; (c) 

the acts or omissions at issue were unjust and unreasonable; and (d) the acts or omissions at issue 

were the proximate cause of the claimed loss.

 7 2 F.M.C.2d
The Commission VACATES the SCO’s finding on remand that Claimant failed to demonstrate 

that Respondent’s conduct occurred on a normal, customary, and continuous basis.

The Commission REMANDS this case to give Claimant a final opportunity to seek discovery 

regarding whether Respondent or its agent engaged in its unjust and unreasonable conduct with 

respect to other shipments or shippers. 

By the Commission. 

Rachel E. Dickon 

Secretary

8

2 F.M.C.2d
9

1Pages 9 through 28 are intentionally deleted 1The December 17, 2019 Order in Docket No. 14-15 was published in duplicate erroneously and has been removed. It can be found at 1 F.M.C.2d 498.

The December 20, 2019 Order in Petition No P3-18 was published in duplicate erroneously and has been removed. It can be found at 1 F.M.C.2d 504. 
FEDERAL MARITIME COMMISSION

Office of Administrative Law Judges

NGOBROS AND COMPANY NIGERIA, Complainant

v. 

OCEAN CARGO LINK,LLC AND KINGSTON ANSAH, 

Respondents. 

DOCKET NO. 14-15

Served: February 4, 2020 

BEFORE: Erin M. WIRTH, Chief Administrative Law Judge. 

INITIAL DECISION GRANTING VOLUNTARY DISMISSAL OF PROCEEDING1

[Notice Not to Review served March 6, 2020, decision administratively final.]

On January 15, 2020, Complainant Ngobros and Company Nigeria Limited filed a status 

report and requested an “order of dismissal without prejudice pursuant to 46 CFR § 502.72 (3).” 

Complainant indicated that it had attempted to contact Respondents but had not been successful. 

Respondents did not file a response to the dismissal request.

The complaint was filed on November 24, 2014, and an initial decision finding violations 

of the Shipping Act was issued on November 10, 2015. The Commission reviewed the 

proceeding and on December 17, 2019, the Commission issued an order vacating the initial 

decision, dismissing as moot the claims against Kingston Ansah, and remanding the claims 

against Ocean Cargo Link, LLC in light of the Commission’s revised interpretation of section 

41102(c) of the Shipping Act. The Commission stated that while the review was pending, Mr. 

Ansah filed for bankruptcy and plead guilty to federal crimes. Commission Order at 4.

Commission Rule 72(a)(3) permits voluntary dismissals by the presiding officer.

(3) By order of the presiding officer. Except as provided in paragraphs (a)(1) and

(a)(2) of this section, an action may be dismissed at the complainant’s request

only by order of the presiding officer, on terms the presiding officer considers

proper. If the motion is based on 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. Unless the order states otherwise, a dismissal under this paragraph

is without prejudice.

1

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

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

the order. 46 C.F.R. § 502.254(h).

29 2 F.M.C.2d
This proceeding cannot be voluntarily dismissed under Rule 72(a)(1) as the answer has 

been served and cannot be dismissed by stipulation under Rule 72(a)(2) as Complainant was 

unable to located Respondents to obtain an agreement to stipulate. In addition, no settlement has 

been reached. The Complainant states good cause to dismiss the proceeding and should not be 

required to expend additional resources on this matter. Accordingly, dismissal under Rule 

72(a)(3) without prejudice is appropriate.

It is hereby ORDERED that complainant’s request for voluntary dismissal without 

prejudice be GRANTED. It is FURTHER ORDERED that the complaint be DISMISSED

WITHOUT PREJUDICE and this proceeding be DISCONTINUED. 

Erin M. Wirth

Chief Administrative Law Judge

30 2 F.M.C.2d
FEDERAL MARITIME COMMISSION

Office of Administrative Law Judges

MARINE TRANSPORT LOGISTICS,INC., Complainant

v. 

CMA-CGM (AMERICA) LLC, Respondent. 

DOCKET NO. 18-07 

Served: February 18, 2020

BEFORE: Erin M. WIRTH, Chief Administrative Law Judge. 

INITIAL DECISION APPROVING CONFIDENTIAL SETTLEMENT AGREEMENT1

[Notice Not to Review served March 20, 2020, decision administratively final.]

I. Introduction

On January 30, 2020, Complainant Marine Transport Logistics, Inc. (“Marine Transport

Logistics” or “MTL”) and Respondent CMA-CGM (America) LLC (“CMA”) filed a joint 

petition for approval of settlement (“motion”). The parties attached a copy of the settlement 

agreement and release. The parties jointly move for approval of the settlement agreement, 

voluntary dismissal with prejudice, and confidentiality for the settlement agreement.

II. Procedural History

On August 23, 2018, Marine Transport Logistics filed a complaint alleging violations of

the Shipping Act including that Respondent violated 46 U.S.C. §§ 41102(c), 41104(9), and 

41104(10), in the shipment and failure to deliver nine containers to Yemen in December 2017. 

On September 26, 2018, Respondent CMA filed its answer, denying the allegations and raising 

affirmative defenses.

On October 25, 2018, the parties filed a joint motion requesting a stay of proceedings 

while the parties pursued mediation with the assistance of the Commission’s Office of Consumer 

Affairs and Dispute Resolution Services (“CADRS”). A limited extension was granted. The 

parties filed additional status reports and requests for stays on December 14, 2018, February 15, 

2019, March 22, 2019, April 22, 2019, and June 6, 2019, indicating that settlement negotiations 

were ongoing. On May 30, 2019, this proceeding was reassigned to the undersigned. On June 

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.

31 2 F.M.C.2d
10, 2019, an order was issued denying an extended stay and providing a deadline to file 

dispositive motions.

On July 10, 2019, Respondent filed a motion to dismiss. On August 6, 2019, 

Complainant filed an opposition to the motion to dismiss and a cross-motion for leave to file an 

amended complaint. On October 8, 2019, an order was issued granting the amended complaint 

and denying the motion to dismiss.

Status reports on December 16, 2019, and January 15, 2020, indicate that the parties had 

exchanged initial discovery, scheduled depositions, and were continuing to remain actively 

involved in settlement negotiations.

III. Discussion

Using language borrowed in part from the Administrative Procedure Act,2 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).

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 American Jurisprudence, 2d Ed., 777-778 

(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.” 

2 “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).

32 2 F.M.C.2d
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 the instant case, the settlement is the result of arm’s-length negotiations 

between two sophisticated entities, both 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. 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 3.

Based on the representations in the settlement 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 been discussing settlement over an extended period of time. 

The proceeding would require potentially expensive additional 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. There is no evidence of fraud, duress, undue 

influence, or mistake nor harm to the public. Accordingly, the settlement agreement is approved.

The partiesrequest 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).

33 2 F.M.C.2d
The full text of the 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.

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 petition to approve the settlement agreement between Marine 

Transport Logistics, Inc. and CMA-CGM (America) LLC 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

34 2 F.M.C.2d
FEDERAL MARITIME COMMISSION

Office of Administrative Law Judges

LOGFRET,INC., Complainant

v. 

KIRSHA,B.V., LEENDERT JOHANNESS BERGWERFF A/K/A 

HANS BERGWERFF, AND LINDA SIEVAL, Respondents. 

DOCKET NO. 18-10

Served: February 20, 2020

BEFORE: Erin M. WIRTH, Chief Administrative Law Judge. 

ORDER DENYING RESPONDENTS’ PETITION FOR ATTORNEY FEES1

[Exceptions filed by Respondents, 3/26/2020, Commission final decision pending.] 

I. Background

A. Summary

On October 23, 2019, Respondents filed a petition seeking attorney fees (“Petition”) and 

a motion for confidential treatment (“Motion”) in this proceeding which became administratively 

final on October 21, 2019. In response to an order, on November 7, 2019, Respondents filed a 

supplement to the petition for attorney fees (“Petition Supplement”). After the denial of a motion 

to strike, which granted additional time to respond to the petition, Complainant timely filed its 

response to the petition (“Response”) on January 13, 2020. Complainant did not contest 

Respondents’ motion for confidential treatment. 

Complainant Logfret, Inc. (“Logfret”) is a non-vessel-operating common carrier 

(“NVOCC”) and an affiliate of Logfret B.V., a common carrier based in The Netherlands. 

Respondents are two individuals and a corporation: Mr. Bergwerff, a Dutch national, was 

Managing Director of Logfret B.V.; Ms. Sieval, a Dutch national, was a sales manager for 

Logfret B.V; and corporate Respondent Kirsha B.V. is a corporation in The Netherlands whose 

owner and managing director is Mr. Bergwerff. Amended Complaint at 2-3. 

Complainant alleged that “Mr. Bergwerff, with the help of Ms. Sieval, directed the staff 

of Logfret B.V. to handle inbound shipments to the United States through Delmar USA rather 

than Logfret, for at least two accounts” and that for “months thereafter, Mr. Bergwerff and Ms. 

Sieval knowingly received information about the nature, kind, quantity, and destination of cargo 

tendered or delivered to Logfret B.V. with the intent to be shipped to the United States on 

Logfret bills of lading.” Amended Complaint at 5-6. Respondents denied the allegations, 

1

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

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

service of the order. 46 C.F.R. § 502.254(h). 

35 2 F.M.C.2d
asserting that this was “an internal disagreement among Logfret entities, employees and former 

management of Logret, B.V.,” the Logret affiliate in The Netherlands. Respondents’ Opposition 

to Motion to Amend Complaint at 4. 

The initial decision granted Respondents’ motion to dismiss, concluding that “this 

appears to be an employment dispute between affiliates, not a Shipping Act violation,” and 

stating:

The amended complaint does not make a plausible claim that the Respondents were 

NVOCCs as they did not hold themselves out or assume responsibility as required 

by the Shipping Act. Therefore, both personal and subject matter jurisdiction are 

lacking. In addition, there is no basis to assert jurisdiction based on Respondents 

being “other persons” and no attempt is made to pierce the corporate veil.

Initial Decision at 19 (citation omitted). 

B. Procedural History

This proceeding began with a complaint filed on November 14, 2018. The time to 

respond to the complaint was extended to January 2019. On January 28, 2019, Respondents 

Kirsha B.V., Mr. Bergwerff, and Ms. Sieval filed a motion to dismiss the complaint.

On February 7, 2019, Complainant Logfret filed a motion to amend the complaint. In 

response to an order, on February 21, 2019, Complainant filed a memorandum in support of the 

motion to amend the complaint and attached the proposed amended complaint. On March 7, 

2019, Respondents filed an opposition to the motion to amend the complaint and statement of 

impact of the proposed amendment on their motion to dismiss. On April 24, 2019, an order was 

issued granting the motion to amend the complaint and allowing the parties additional time to 

brief the motion to dismiss as applied to the amended complaint.

On May 8, 2019, Complainant filed a memorandum in opposition to Respondents’ 

motion to dismiss. On May 20, 2019, Respondents filed a reply to Complainant’s opposition to 

the motion to dismiss. On September 17, 2019, an initial decision was issued granting the motion 

to dismiss. No exceptions were filed and the initial decision became administratively final on 

October 21, 2019. 

On October 23, 2019, Respondents filed a petition seeking attorney fees and a motion for 

confidential treatment in this proceeding. On October 28, 2019, sua sponte, an order was issued 

providing additional time for Respondents to supplement their petition and for Complainant to 

file a response. On November 7, 2019, Respondents filed their supplement to the petition for 

attorney fees.

On November 14, 2019, Complainant filed a motion to strike Respondents’ petition for 

attorney fees as premature. On November 19, 2019, an order on Complainant’s motion to strike 

the petition for attorney fees was issued denying the motion to strike the petition but expanding 

the time for Complainant to respond to the petition and supplement until January 13, 2020. On 

January 13, 2020, Complainant filed its timely response to Respondents’ petition.

36 2 F.M.C.2d
II. Discussion

A. Burden of Proof

Commission Rule 254 states that the appeal of an award of attorney fees is governed by 

the procedures in 46 C.F.R § 502.227. 46 C.F.R. § 502.254(h). The applicant for an award of 

attorney fees bears the burden of establishing entitlement to an award, documenting the 

appropriate hours, and justifying the reasonableness of the rates. 46 C.F.R. § 502.254(d); Blum v. 

Stenson, 465 U.S. 886, 895 n.11 (1984) (“[C]ourts properly have required prevailing attorneys to 

justify the reasonableness of the requested rate or rates.”); Hensley v. Eckerhart, 461 U.S. 424, 

437 (1983) (The “fee applicant bears the burden of establishing entitlement to an award and 

documenting the appropriate hours expended and hourly rates.”). The petition was filed by 

Respondents and they have the burden of proof. 

B. Arguments of the Parties

In their petition, Respondents request attorney fees, document the staff involved and 

hours spent, and state that “[b]ased on FMC precedent and the facts and outcome in this 

proceeding attorney’s fees should be awarded to Respondents.” Petition at 1-2. In their 

supplement, Respondents assert that they are eligible for an award of attorney fees as prevailing 

parties, and entitled to an award because “Complainant submitted a frivolous complaint” which 

was “motivated by an improper internal corporate dispute outside of the FMC’s jurisdiction” and 

“exhibited ‘objective unreasonableness.’” Petition Supplement at 2-3. Respondents assert that 

“Complainant egregiously failed to substantiate the legal and factual components of its case,” 

that “bizarre inconsistencies” in arguments “added vexatious, expensive, and unfair tasks” in 

defending against the amended complaint, and that “two of the respondents [are] individuals who 

also experienced significant personal and emotional tax during the pendency of the proceeding.”

Petition Supplement at 3-5. 

Complainant argues that an automatic award of attorney fees is not consistent with the 

statutory amendments to the attorney fee provision; a presumption of attorney fees is not 

consistent with the purposes of the Shipping Act; the FMC has previously denied attorney fees in 

a proceeding similar to this one; and Respondents have failed to substantiate and justify 

adequately the large amount of attorney fees requested. Response at 6-16. 

C. Eligibility for Attorney Fees

As an initial matter, it is worth addressing whether the undersigned has jurisdiction to 

address the merits of the petition for attorney fees. The parties did not raise this issue, however, 

“every federal court has an independent obligation to satisfy itself of the existence of subject 

matter jurisdiction.” Minden Pictures, Inc. v. John Wiley & Sons, Inc., 2014 U.S. Dist LEXIS 

60901 at *15-16 (N.D. Cal. 2014). Federal Courts typically rule on attorney fee requests even 

where a plaintiff lacks statutory standing. Minden, 2014 U.S. Dist LEXIS 60901 at *16-20 (“the 

overwhelming majority of district courts around the country (and within this Circuit) agree with 

the Seventh Circuit’s approach and assess the merits of an attorneys’ fees award even after 

finding a plaintiff lacked Copyright Act standing.”). Accordingly, it appears that the attorney fee 

petition is within the jurisdiction of the undersigned.

37 2 F.M.C.2d
On March 1, 2016, the Commission amended its Rules of Practice and Procedure 

governing the award of attorney fees in order to implement the statutory amendments made by 

the Howard Coble Coast Guard and Maritime Transportation Act of 2014, Pub. L. No. 113-282, 

§ 402, 128 Stat. 3022 (Dec. 18, 2014); see generally Docket No. 15-06.

Commission Rule 254 states that in “any complaint proceeding brought under 46 U.S.C. 

§ 41301 (sections 11(a)-(b) of the Shipping Act of 1984), the Commission may, upon petition,

award the prevailing party reasonable attorney fees.” 46 C.F.R. § 502.254(a). “The term

‘prevailing party’ . . . is a ‘legal term of art,’ and is ‘interpreted . . . consistently’” and the 

premise is “‘the material alteration of the legal relationship of the parties in a manner which 

Congress sought to promote in the fee statute.’” Final Rule, 81 Fed. Reg. 10,508 at 10,511-12

(Mar. 1, 2016) (citing Smyth v. Rivero, 282 F.3d 268, 274 (4th Cir. 2002) (citations omitted) and

Texas State Teachers Ass’n v. Garland Indep. Sch. Dist., 489 U.S. 782, 792-93 (1989)).

The leading Commission cases implementing the rule are Edaf Antillas, Inc. v. Crowley 

Caribbean Logistics, 34 S.R.R. 439 (FMC 2016) and Baltic Auto Shipping Inc. v. Hitrinov, 34 

S.R.R. 944 (FMC 2017) and the parties were ordered to address the issues raised by these cases.

In the underlying proceeding, Respondents’ motion to dismiss was successful and the 

amended complaint was dismissed with prejudice.This constituted a material alteration of the 

legal relationship of the parties as required to be a prevailing party. In their response to the 

petition, Logfret states that “Logfret does not take issue with the determination that the Initial 

Decision effected a material alteration in the legal relationship of the parties, or with 

Respondents’ claim that Respondents are the ‘prevailing party’ in this proceeding for purposes of 

the Petition for Attorney’s Fees.” Response at 6 n.6. Respondents are therefore eligible for 

attorney fees as the prevailing party, however, in order to be awarded attorney fees, they also 

need to be found to be entitled to attorney fees.

D. Entitlement to Attorney Fees

The Commission has stated that the “primary consideration in determining entitlement to 

attorney fees is whether such an award is consistent with the purposes of the Shipping Act, and 

any factors the Commission relies upon in individual cases should be consistent with these 

purposes” and “prevailing complainants and prevailing respondents should be treated in an evenhanded manner in determining whether to award attorney fees.” Final Rule, 81 Fed. Reg. at 

10,509, 10,513. 

In Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 n.19 (1994), a Supreme Court case 

that addressed entitlement, wherein prevailing plaintiffs and prevailing defendants 

were treated similarly, the Court put forth several factors to utilize in considering 

entitlement: “frivolousness, motivation, objective unreasonableness (both in the 

factual and in the legal components of the case) and the need in particular 

circumstances to advance considerations of compensation and deterrence.” (quoting 

Lieb v. Topstone Industries, Inc., 788 F.2d 151, 156 (3d Cir. 1986) (internal 

quotations omitted). Although Fogerty addressed attorney fee awards under a 

different statute, we believe that they provide a useful guide for the Commission.

38 2 F.M.C.2d
Edaf, 34 S.R.R. at 445. 

In Edaf, the Complainant “knowingly disregarded the ALJ’s orders on numerous 

occasions, abandoned its claim, forced multiple Respondents to expend significant resources of 

both time and money in their defense and, perhaps most egregiously, failed to terminate the 

claim when it could have limited the expense of the Respondents.” Edaf, 34 S.R.R. at 445. The 

Commission concluded: 

We believe that deterring complainants from failing to prosecute their claims by 

awarding respondents attorney fees furthers the purposes of the Shipping Act.

Proceedings that continue on because of non-responding parties like this one, 

waste the time and resources of both respondents and the Commission and 

potentially delay the resolution of other complaint proceedings. Therefore, we are 

granting in part IFS/Neutral and CCL’s petitions for attorney fees in this case.

Edaf, 34 S.R.R. at 445. 

In Baltic Auto, the Commission denied attorney fees in a case that was dismissed for 

statute of limitations grounds and therefore did not reach the merits of the claim. The 

Commission found the Complainant in Baltic Auto “had a colorable argument that its claim arose 

within the statute of limitations and that the claim was not objectively unreasonable.” Baltic 

Auto, 34 S.R.R. at 955. 

“‘Objective unreasonableness’ is generally used to describe claims that have no legal or 

factual support.” Viva Video, Inc. v. Cabrera, 9 Fed. App’x 77, 80 (2d Cir. 2001). The “fact that 

a claim was not successful does not automatically mean that it was objectively unreasonable.”

Baltic Auto Shipping, 34 S.R.R. at 955. 

The mere fact that a defendant has prevailed, however, does not necessarily equate 

with an objectively unreasonable claim. To hold otherwise would establish a per se

entitlement of attorney’s fees whenever issues pertaining to judgment are resolved 

against a copyright plaintiff. . . . This is not a correct construction of the law. 

Similarly, the fact that a defendant has prevailed on a motion to dismiss or on 

summary judgment does not require the court to award fees. However, if a 

copyright claim is clearly without merit or otherwise patently devoid of legal or 

factual basis, that claim ought to be deemed objectively unreasonable, and an award 

of fees and costs is then proper. 

Chivalry Film Prods. v. NBC Universal, Inc., 2007 U.S. Dist. LEXIS 86889 at *6-7 (S.D.N.Y. 

2007) (internal quotation marks and citation omitted). Moreover, it is common to have alternate 

theories of liability and for factual and legal arguments to develop after a complaint is filed.

This case falls between Edaf where a fee petition was granted and Baltic Auto where a fee

petition was denied. Unlike the complainant in Edaf, Complainant sub judice did not fail to 

follow instructions and did not fail to prosecute its claims. However, unlike in Baltic Auto, the 

merits were reached in this case and the underlying case was dismissed, although on a 

preliminary issue. 

39 2 F.M.C.2d
Respondents assert that the complaint was “frivolous” and that Complainant “egregiously 

failed to substantiate the legal and factual components of its case.” Petition Supplement at 3. The 

factual scenario raised by Complainant was unusual. Although the elements needed to establish 

jurisdiction are well-settled, there were no similar cases discussing this jurisdictional scenario 

which would have provided clear guidance. While Complainant was not successful, even after 

being permitted to amend its complaint, it raised a colorable claim which was not frivolous. In 

addition, the claim was not objectively unreasonable as it was not clearly without merit or 

otherwise patently devoid of legal or factual basis. This factor does not weigh in favor of 

granting attorney fees.

The Court may consider the non-prevailing party’s motive in pursuing the litigation and 

whether there is a need to award fees as a deterrent. “[P]arties are improperly motivated only if 

they do not have a good faith intent to protect a valid interest, but rather a desire to discourage 

and financially damage a competitor by forcing it into costly litigation.” Warren Publi’g Co. v. 

Spurlock, 2010 U.S. Dist. LEXIS 20584 at *37 (E.D. Pa. 2010) (citation omitted). While it is 

possible that Complainant was motivated by improper intent, whether to undermine a potential 

competitor, restrain competition, cause personal distress, or gain unfair advantage in the other 

litigation between the parties, it is also possible that Complainant wanted to pursue every avenue 

possible to legally protect its business interests. There is not sufficient evidence to determine 

Complainant’s motivation and therefore, this factor does not weigh in favor of granting the 

petition.

While the relative financial strength of the parties is a valid consideration in setting the 

amount of attorney fees, Lieb v. Topstone Indus., 788 F.2d 151, 156 (3d Cir. 1986), it is not clear 

whether it is relevant to the determination of eligibilityfor attorney fees. See Canal+ Image Uk 

Ltd. v. Lutvak, 792 F. Supp. 2d 675, 680 (S.D.N.Y. 2011). Here, Complainant filed suit against 

two Respondents in an individual capacity, and Respondents assert that they “experienced

significant personal and emotional tax during the pendency of the proceeding.” Petition 

Supplement at 5. Even if this factor is relevant to determining the eligibility of fees, and 

accepting that the proceeding was distressing to Respondents, this factor alone is not sufficient to 

establish an entitlement to attorney fees.

Another consideration is that this case was decided at a preliminary stage, after the filing

of a motion to dismiss, and was not appealed. This could weigh against awarding fees as the case 

was not prolonged but could also weigh in favor of awarding fees as the issue was resolved for 

failure to meet initial jurisdictional requirements and for being facially insufficient. See Budget 

Cinema, Inc. v. Watertower Assocs., 81 F.3d 729, 732 (7th Cir. 1996). In this case, this factor is 

neutral. 

Petitioner has not met their burden to establish an entitlement to attorney fees. The 

purposes of the Shipping Act are met when complainants are able to raise potential violations, 

even under unusual or unique circumstances, without the chilling impact of having to pay 

Respondents’ attorney fees. There is no evidence that this proceeding was frivolous, improperly 

motivated, objectively unreasonable, or otherwise appropriate for an award of attorney fees. 

Accordingly, the petition for attorney fees is denied.

40 2 F.M.C.2d
E. Confidentiality

Respondents moved for confidential treatment of attachmentsto their petition for 

attorney fees and Complainant did not object to the request. Respondents submitted an 

appropriately redacted public version as well as the unredacted exhibit, which is available to the 

Commission. Such information is appropriate for confidential treatment. Accordingly, there is 

good cause to grant the motion for confidential treatment.

III. Order

For the reasons stated above, it is hereby ORDERED that Respondents’ petition for 

attorney fees be DENIED. It is further ORDERED that Respondents’ motion for confidential 

treatment be GRANTED. 

Erin M. Wirth 

Chief Administrative Law Judge

 41 2 F.M.C.2d
FEDERAL MARITIME COMMISSION

Office of the Administrative Law Judges

M/S PARSONS OVERSEAS, Claimant

v. 

SEVEN SEAS SHIPPING USA,INC., Respondent. 

DOCKET NO. 1960(I) 

Served: February 26, 2020 

BEFORE: Theresa DIKE, Small Claims Officer. 

ORDER GRANTING VOLUNTARY DISMISSAL1

[Notice Not to Review served March 30, 2020, decision administratively final.] 

On March 6, 2018, Claimant M/S Parsons Overseas (“Parsons”) initiated this proceeding 

by filing a claim with the Federal Maritime Commission (“Commission” or “FMC”) against 

Respondent Seven Seas Shipping USA, Inc. (“Seven Seas”), alleging that Seven Seas “failed to 

establish, observe, and enforce just and reasonable regulations and practices relating to or 

connected with receiving, handling, storing, or delivering property,” in violation of the Shipping 

Act at 46 U.S.C. § 41102(c). Claim at 5. On July 9, 2018, an Initial Decision was issued in this 

proceeding finding that Seven Seas violated section 41102(c) and awarding reparations to 

Parsons. M/S Parsons Overseas v. Seven Seas Shipping USA, Inc., Informal Docket No. 1960(I), 

Decision, (SCO July 9, 2018) (“SCO Decision”). 

On December 17, 2018, the Commission promulgated an interpretive rule on the scope of 

section 41102(c). Interpretive Rule, Shipping Act of 1984, 83 FR 64478 (Dec. 17, 2018) (“Final 

Rule”). On March 7, 2019, the Commission issued an Order vacating the SCO Decision and 

remanding this proceeding to the undersigned for adjudication of the 41102(c) claim consistent 

with the interpretive rule. M/S Parsons Overseas v. Seven Seas Shipping USA, Inc., Informal 

Docket No. 1960(I), Order Vacating and Remanding Decision, (FMC Mar. 7, 2019).

On July 2, 2019, an Initial Decision on Remand was issued finding that Claimant had 

failed to establish that the unjust and unreasonable acts found to have been committed by 

Respondent occurred on a normal, customary, and continuous basis, as required to find a section 

41102(c) violation and award reparations under the new interpretive rule. M/S Parsons Overseas 

v. Seven Seas Shipping USA, Inc., Informal Docket No. 1960(I), Initial Decision on Remand, 

(SCO July 9, 2019) (“SCO Decision on Remand”).

1 Pursuant to 46 C.F.R. § 502.304(g), this decision will become final unless the Commission 

elects to review it within 30 days of service.

 42 2 F.M.C.2d
On December 12, 2019, the Commission issued an Order vacating the finding that 

Claimant failed to demonstrate that Respondent’s conduct occurred on a normal, customary, and 

continuous basis. M/S Parsons Overseas v. Seven Seas Shipping USA, Inc., Informal Docket No. 

1960(I), Order Affirming-in-Part and Vacating-in-Part Decision on Remand and Remanding for 

Discovery, (FMC Dec. 12, 2019) (“Second Commission Remand Order”). The Commission 

stated that the purpose for this was to “give Claimant a final opportunity to seek discovery

regarding whether Respondent or its agent engaged in its unjust and unreasonable conduct with 

respect to other shipments or shippers.” Second Commission Remand Order at 13. The 

Commission affirmed the SCO Decision on Remand in all other respects. Second Commission 

Remand Order at 12. 

On February 4, 2020, Claimant filed a “Request to Withdraw Complaint and Dismiss 

Proceeding Without Prejudice Pursuant to 46 C.F.R. § 502.72(a)(3)” (“Request for Dismissal”). 

Claimant asserts that its request to dismiss the proceeding is not due to a settlement between the 

parties. Request for Dismissal at 2. Claimant states: 

Complainant herein submits this request because of the expenses incurred to date 

in pursuing this matter and the uncertainty of further expenses given the trajectory 

of decision-making in this matter. The Federal Martime Commission’s (FMC) 

decision vacating the July 9, 2018 order of the Small Claims Officer (SCO) which 

found that Respondent violated 46 U.S.C. § 41102(c) and remanding the case 

back to the parties to litigate the FMC’s new interpretation of 46 U.S.C. 

§ 41102(c) to determine whether Respondent’s acts or omissions occurred on a 

normal, customary, and continuous basis, which Complainant maintains was 

impermissibly retroactively applied, has rendered it financially infeasible for 

Complainant to pursue resolution of this matter through FMC procedures, which 

have unexpectedly changed throughout pendency of this matter to Complainant’s 

detriment.

Request for Dismissal at 1. Claimant asks that this proceeding be dismissed without prejudice 

pursuant to 46 C.F.R. § 502.72(a)(3). Request for Dismissal at 2. 

The Commission’s Rule 502.72(a)(3) provides in pertinent part: 

[A]n action may be dismissed at the complainant’s request only by order of the 

presiding officer, on terms the presiding officer considers proper. If the motion is 

based on 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. Unless the 

order states otherwise, a dismissal under this paragraph is without prejudce.

46 C.F.R. § 502.72(a)(3). 

Although Rule 72, governing dismissal of Commission proceedings, is not applicable to 

Subpart S proceedings, the undersigned used the rule as a guide for ruling on Claimant’s request 

for dismissal. Claimant states that it is not seeking a dismissal because the parties have reached a 

 43 2 F.M.C.2d
settlement but rather, because it is not financially feasible for Claimant to continue to litigate this 

case. Given that Claimant initially prevailed in its claim that Respondent violated section 

41102(c) but was subsequently forced to relitigate its claim due to the Commission’s new 

interpretive rule, I find that it is proper to grant Claimant’s request to dismiss this proceeding 

without prejudice based on Claimant’s claim that it is not financially feasible for it to continue to 

litigate this proceeding. 

For the reasons stated above, it is hereby

ORDERED that the request to withdraw be GRANTED and the Claim be DISMISSED

WITHOUT PREJUDICE.

Theresa Dike

Small Claims Officer

 44 2 F.M.C.2d
FEDERAL MARITIME COMMISSION

NGOBROS AND COMPANY NIGERIA LIMITED, Complainant

v. 

OCEANE CARGO LINK, LLC AND KINGSTON ANSAH,

INDIVIDUALLY, Respondents. 

DOCKET NO. 14-15 

Served: March 6, 2020 

NOTICE NOT TO REVIEW

Notice is given that the time within which the Commission could determine to review the 

Administrative Law Judge’s February 4, 2020, Initial Decision Granting Voluntary Dismissal of 

Proceeding has expired. Accordingly, the decision has become administratively final. 

Rachel E. Dickon

Secretary

45 2 F.M.C.2d
FEDERAL MARITIME COMMISSION

MARINE TRANSPORT LOGISTICS,INC.,Complainant

v.

CMA-CGM (AMERICA),LLC, Respondent.

DOCKET NO. 18-07

Served: March 20, 2020

NOTICE NOT TO REVIEW

Notice is given that the time within which the Commission could determine to review the 

Administrative Law Judge’s February 18, 2020, Initial Decision Approving Confidential 

Settlement Agreement has expired. Accordingly, the decision has become administratively final.

Rachel E. Dickon

Secretary

46 2 F.M.C.2d
FEDERAL MARITIME COMMISSION

POSSIBLE REVOCATION OF PASSENGER VESSEL OPERATOR 

PERFORMANCE CERTIFICATE NO. P1397 GREAT NORTHERN 

& SOUTHERN NAVIGATION CO.,LLC DBA FRENCH 

AMERICA LINE

DOCKET NO. 19-08 

Served: March 20, 2020 

BY THE COMMISSION: Michael A. KHOURI, Chairman, Rebecca F. DYE, Daniel B. 

MAFFEI, Louis E. SOLA, and Carl W. BENTZEL Commissioners. 

ORDER REVOKING CERTIFICATE (PERFORMANCE) 

On April 10, 2019, the Commission’s Bureau of Certification and Licensing (BCL) 

notified Great Northern & Southern Navigation Co., LLC dba French America Line 

(Respondent) that it intended to revoke Respondent’s Certificate of Financial Responsibility for 

Indemnification of Passengers for Nonperformance of Transportation (Certificate). Respondent 

requested a hearing, and, on October 31, 2019, the Federal Maritime Commission (Commission) 

granted the hearing request and directed Respondent to show cause why its Certificate should not 

be revoked for failing to respond to lawful inquiries and requests for information (46 C.F.R. 

§ 540.8(b)(3)), providing willfully false information (46 C.F.R. § 540.8(b)(1)), and failing to 

maintain qualification as financially responsible in accordance with the requirements of 46 

C.F.R. Part 540 (46 C.F.R. § 540.8(b)(2)). Order Granting Hearing and Directing Great Northern 

& Southern Navigation Co. LLC dba French America Line to Show Cause, 84 Fed. Reg. 59809, 

59810 (Nov. 6, 2019) (Hearing Order). 

For the reasons set forth below, we find that Respondent has failed to respond to lawful 

inquires and requests for information under § 540.8(b)(3) and that Respondent’s repeated failures 

to adhere to the requirements of its escrow agreement demonstrate it is not financially 

responsible under § 540.8(b)(2). Consequently, we revoke Respondent’s Certificate. 

I. BACKGROUND

A. Escrow Agreement and Certificate

The Commission requires that anyone in the United States desiring to arrange, offer, 

advertise, or provide passage on a vessel first obtain a Certificate (Performance). 46 C.F.R. 

§ 540.3. The Certificate evidences the Commission’s finding that a passenger vessel operator 

(PVO) has adequate financial responsibility to indemnify passengers for nonperformance of 

water transportation. 46 C.F.R. § 540.7(a). The coverage (e.g., surety bond, insurance, or escrow 

account) is used to reimburse passengers when there has been a failure to perform cruises as 

 47 2 F.M.C.2d
contracted and no action to refund passengers has taken place.1

Respondent is a Louisiana limited liability company, and Mr. Christopher Kyte is the 

chairman of its board. Kyte Aff. ¶ 3. On October 4, 2016, Respondent entered into an Escrow 

Agreement with KeyBank, N.A. for the purposes of providing proof of financial responsibility 

for indemnification of passengers in the event of nonperformance. BOE Ex. G at BOE0152.2

Upon receipt of the Escrow Agreement, BCL issued Respondent Performance Certificate No. P1397, effective October 5, 2016. Id.

Under an escrow agreement, a PVO is to deposit unearned passenger revenue into an 

escrow account. E.g., BOE Ex. G at BOE0152. If a cruise is completed, the escrow agent 

transfers these funds to the PVO. If a cruise is cancelled, the funds in the escrow account are 

available to reimburse passengers of the cancelled cruise. E.g., id. at BOE0155. In this way, 

passengers have recourse in the event a PVO declares bankruptcy or is insolvent.

In actuality, the process set forth in Respondent’s Escrow Agreement is more 

complicated and involves comparing on a weekly basis the amount of unearned passenger 

revenue with the funds in the escrow account. Id. at BOE0153. The Escrow Agreement requires 

Respondent to submit to KeyBank and the Commission weekly recomputations of unearned 

passenger revenue and refunds, called Recomputation Certificates. BOE Ex. G at BOE0153-

BOE0154. Respondent is also required to submit audit reports that attest to the veracity of 

unearned passenger revenue recomputations on a quarterly basis. Id. at BOE0154. 

B. Vessel Problems and Cancelled Cruises

On October 27, 2016, Respondent’s sole vessel, the Louisiane, suffered a sanitary system 

failure. Kyte Aff. ¶ 5. Respondent hoped to have its vessel repaired quickly, but ultimately had 

to cancel multiple sailings. Resp’t Mem. at 1-2. Nonetheless, Respondent continued to advertise 

and accept deposits until October 2017.3 Id. at 2. Respondent’s vessel is currently on charter to 

the United States Navy as an accommodation vessel. Kyte Aff. ¶ 20. This charter has been 

extended to March 2020 and may be extended into 2021. Id. At present, Respondent has no 

immediate plans to return to offering cruises, but it nonetheless wishes to retain its Certificate as 

it may wish to resume operating cruises at some point in the future. Id. ¶ 21. 

1 The certificate requirement derives from 46 U.S.C. § 44102(a), which provides that “[a] person 

in the United States may not arrange, offer, advertise, or provide transportation on a vessel to which this 

chapter applies unless the person has filed with the Federal Maritime Commission evidence of financial 

responsibility to indemnify passengers for nonperformance of the transportation.”

2 The Commission permits PVOs to establish adequate financial responsibility for 

nonperformance by filing evidence of an escrow account for indemnification of passengers. 46 C.F.R. 

§ 540.5(b). The Commission’s regulations provide a sample escrow agreement for parties to use. Id.

3 Respondent’s website continued to advertise its line and its vessel as recently as August 2019. 

BOE Ex. I.

 48 2 F.M.C.2d
C. Compliance-Related Issues

Since receiving its Certificate in October 2016, Respondent has failed to timely submit 

quarterly audits as required by the Escrow Agreement, failed to respond to BCL requests for 

information, failed to maintain good standing with the Louisiana Secretary of State, and failed to 

notify BCL of a change in address.

1. Quarterly Independent Audits

Per the terms of the Escrow Agreement, at the end of each quarter, Respondent is 

required to have independent auditors examine the weekly recomputation certificates and opine 

“as to whether the calculations at the end of each fiscal quarter are in accordance with the 

provisions of Paragraph 6” of the Escrow Agreement. BOE Ex. G at BOE0154. These 

examinations are to be conducted “in accordance with generally accepted auditing standards” 

and are to be submitted to Respondent and the Commission within forty-five days after the end

of the quarter. Id.

The Commission did not receive the first independent audit for the 2016 4th Quarter 

covering October, November, and December 2016 by the due date of February 14, 2017. BOE 

Ex. C (Singletary Aff.) ¶ 7. Similarly, none of the quarterly independent audits were received on 

time for any of the quarters in 2017, 2018 and 2019. Id.

On December 22, 2017, Respondent emailed BCL requesting information about the audit 

process and what was needed for compliance. Singletary Aff. ¶ 14. BCL directed Respondent to 

paragraph 8 of the Escrow Agreement, which details the requirements for the independent audit. 

Id. ¶ 15. On May 18, 2018, BCL notified Respondent that it was not in compliance with the 

Escrow Agreement and set a deadline of June 1, 2018, for Respondent to comply and provide 

BCL with the required audit reports, weekly recomputation certificates, statement of good 

standing with the state of Louisiana, and Respondent’s current operating address. Id. ¶ 20. 

Although the deadline was later extended to June 30, 2018, BCL did not receive the documents. 

Id.

On July 12, 2018, BCL held a conference call with Respondent during which Respondent 

agreed to submit a final audit report by July 27, 2018. Id. ¶ 21. On July 16, 2018, Russell 

Haynes, an Industry Analyst in BCL, received a phone call from William Toujouse, who stated 

that he had been employed by Respondent to conduct the quarterly independent audits. BOE Ex. 

D (Haynes Aff.) ¶ 14. According to Respondent, Mr. Toujouse was told during this call that he

met the requirements to perform the audits. Kyte Aff. ¶ 15.

Between July 20 and 24, 2018, at the request of Respondent, BCL emailed Mr. Toujouse 

copies of Respondent's recomputation certificates. Singletary Aff. ¶ 22-24. On July 26, 2018, Mr. 

Toujouse told Tajuanda Singletary, the Director of the Office of Passenger Vessels and 

Information Processing (OPVIP) within BCL, that the delay in the audit reports was due to trying 

to find documentation stored in a warehouse. Id. ¶ 26. BCL did not receive an audit report by 

July 27, 2018. Id. ¶ 21. 

On August 27, 2018, Sandra Kusumoto, the Director of BCL, sent Respondent an email 

regarding its compliance and recapping information from a telephone conversation on August 

 49 2 F.M.C.2d
23, 2018. BOE Ex. A (Kusumoto Aff.) ¶ 28. Ms. Kusumoto noted that fourteen recomputation 

certificates were outstanding as of August 27, 2018, and although BCL had received 

Respondent’s first audit report covering October-December 2016 on August 23, 2018, six 

quarterly audit reports remained outstanding. BOE Ex. M at BOE0304. 

The audit report received on August 23, 2018, was prepared by Mr. Toujouse. Id. Ms. 

Kusumoto noted, however, that this report and the subsequently received reports did not 

resemble the audit reports BCL typically receives from other PVOs’ CPAs. Kusumoto Aff. ¶ 6. 

Mr. Toujouse is not a CPA. 

Although neither the Escrow Agreement nor the Commission’s regulations require that 

independent audits be conducted by a CPA, BCL was concerned that Mr. Toujouse’s reports 

were not in accordance with generally accepted auditing standards, as required by the Escrow 

Agreement. Id. Consequently, BCL requested an opinion on the audit report from the 

Commission’s Office of the Inspector General (IG). Id. The IG opined that the August 2018 

audit report “should not be relied on” because under Louisiana state law, only licensed CPAs can 

perform audits in accordance with general accepted auditing standards. BOE Ex. G at BOE0147-

BOE0149. 

In a letter dated February 6, 2019, BCL informed Respondent that the financial audit was 

not in compliance with paragraph 8 of the Escrow Agreement. BCL gave Respondent 60 days to 

engage an auditor in accordance with Louisiana law and requested that the auditor’s corrections 

to Mr. Toujouse’s reports be submitted by April 8, 2019. Alternatively, BCL proposed that 

Respondent surrender its Certificate. BOE Ex. G at BOE0288.

Respondent claims it engaged John W. Foard, a CPA in New Orleans, to conduct the 

audits. According to Respondent, Mr. Foard contacted the Commission to obtain guidance or an 

example of how the FMC wanted the audit information formatted or presented. When Mr. Foard 

received no example from BCL, Respondent asserts, Mr. Foard told Respondent that he was 

unwilling to prepare the audit. Kyte Aff. ¶ 16.

BCL has no record, however, of a communication from Mr. Foard, but on April 4, 2019, 

it did receive a call from Aaron Ready, a CPA who advised that he had been authorized to 

perform audits for Respondent and wanted to know what the requirements were. Haynes Aff. ¶ 

19. Commission staff informed him that the requirements were outlined in the Escrow 

Agreement, that he should seek the appropriate information from Respondent, and that he needed 

to have a signed engagement letter. Id.

The Commission did not receive any audit reports from Mr. Ready or any CPA by April 

8, 2019, or thereafter. 

2. January 2018 BCL Review

On January 25, 2018, BCL sent Respondent a letter notifying it of BCL’s intent to 

conduct a remote review of unearned passenger revenue pursuant to 46 C.F.R. Part 540.4

 

4 Paragraph 23 of the Escrow Agreement provides that “[t]he Commission shall have the right to 

inspect the books and records of the Escrow Agent and those of the Customer.” BOE Ex. G at BOE0159.

 50 2 F.M.C.2d
Kusumoto Aff. ¶ 5. BCL also requested financial documents commonly maintained by business 

enterprises such as financial statements and general ledgers. BOE Ex. A at BOE0105. 

On January 29, 2018, Respondent requested an extension until February 9, 2018, which 

BCL granted. When the documents were not received on February 9, BCL emailed Respondent 

on February 13, 2018, requesting financial statements and general ledgers. At some point, 

Respondent informed BCL that it did not have the types of documents BCL requested. When 

BCL asked what financial information Respondent could provide the Commission, Respondent 

submitted a spreadsheet showing passenger deposits, payments, cancellations, and 

reimbursements. BOE Ex. A at BOE0105. On February 21, 2018, BCL replied to Respondent 

advising that they were still awaiting the additional documents requested in their January 25 

letter. BOE Ex. M at BOE0292. 

BCL has not been provided the books and records supporting the passenger receipts and 

reimbursements reflected in the spreadsheet provided by Respondent nor any of the additional 

documents or records requested. BOE Ex. A at BOE0105.

3. Respondent’s Address

When Respondent entered into an Escrow Agreement with KeyBank, N.A., for the 

purposes of providing proof of financial responsibility, it identified its address as 700 Churchill 

Parkway, Avondale, Louisiana 70094. BOE Ex. G at BOE0152. By email on May 18, 2018, 

BCL contacted Respondent to, among other things, request Respondent’s current operating 

address. BOE Ex. M at BOE0293. At some point, Respondent provided the Commission with a 

temporary mailing address of 883 Island Drive, Suite 214, Alameda, CA 94502. Later, on May 

31, 2018, Respondent emailed BCL and stated that it remained at the 700 Churchill Parkway 

address. BOE Ex. M at BOE0296.

On July 16, 2018, Commission Area Representative Eric Mintz visited the 700 Churchill 

Parkway address and did not find Respondent or any signage or other indication that suggested 

Respondent maintained a presence at the address. BOE Ex. E (Mintz Aff.) ¶ 2. This address is 

under the control of the Jefferson Parish Economic Development Commission (JEDCO) and Mr. 

Mintz spoke with JEDCO’s president and CEO, who stated that Respondent had been evicted 

several months previously. Id. ¶¶ 1-3. By correspondence emailed July 17, 2018, Scott Rojas, 

Director of Facilities and IT at the building located at the 700 Churchill Parkway address, 

confirmed that Respondent vacated the location the week of November 27, 2017. BOE Ex. F at 

BOE0131. 

On or about February 6, 2019, the Commission sent letters to Respondent about the need 

to correct audit reports. A letter was sent by courier to the 700 Churchill Parkway address. The 

letter was returned stating that no one was at that address. BOE Ex. A at BOE0106. Multiple 

attempts to deliver Commission documents to the 700 Churchill Parkway address on November 

1, 4, and 5, 2019, were unsuccessful. BOE Reply at 10. 

4. Standing with the Louisiana Secretary of State

When Respondent entered the Escrow Agreement, it warranted and represented that, “it is 

a Louisiana limited liability company in good standing, and that is qualified to do business in 

 51 2 F.M.C.2d
Louisiana.” BOE Ex. G at BOE0156. 

By correspondence emailed May 18, 2018, BCL notified Respondent that it was not in 

compliance with its Escrow Agreement and set a deadline of June 1, 2018, for Respondent to 

verify that it was in good standing with the Secretary of State of Louisiana. BOE Ex. M at 

BOE0293. On May 31, 2018, Respondent emailed a letter to BCL in which it stated: “we can 

verify that the Great Northern & Southern Navigation Co., LLC d/b/a French America Line is in 

good standing with the Secretary of State of Louisiana.” BOE Ex. M at BOE0296. 

As of October 9, 2019, FAL was not in good standing with the Louisiana Secretary of 

State. BOE Ex. K at BOE0257. On November 22, 2019, Respondent renewed its good standing. 

BOE Reply at 7.

II. DISCUSSION

Although the record does not support revocation under 46 C.F.R. § 540.8(b)(1), grounds 

for revocation exist under § 540.8(b)(2) and (3). Specifically, Respondent failed to timely submit 

quarterly audit reports, thereby violating the terms of its Escrow Agreement, and Respondent has 

failed to respond to numerous inquiries and document requests from Commission staff. 

Additionally, the Commission finds that revoking Respondent’s Certificate is more appropriate 

than suspending it.

A. Burden and Standard of Proof

While neither Respondent nor BOE addresses the burden of proof or standard of proof in 

PVO certificate revocation proceedings, in analogous cases involving order-to-show-cause 

revocation proceedings for ocean transportation intermediary licenses, the Commission held that 

the burden of proof is on BOE. In re: Revocation of Ocean Transp. Intermediary License No. 

017843 – Washington Movers, Inc., 1 F.M.C.2d 5, 8 (FMC 2018). Moreover, the standard of 

proof in license revocation proceedings is preponderance of the evidence. Id. The Commission 

adopts these standards in certificate revocation proceedings under Part 540 of its regulations.

B. Grounds for Revocation

Section 44102 of Title 46 provides that: 

(a) Filing requirement. A person in the United States may not arrange, offer, 

advertise, or provide transportation on a vessel to which this chapter applies 

unless the person has filed with the Federal Maritime Commission evidence of 

financial responsibility to indemnify passengers for nonperformance of the 

transportation. 

(b) Satisfactory evidence. To satisfy subsection (a), a person must file

(1) Information the Commission considers necessary; or

(2) A copy of the bond or other security, in such form as the Commission by 

regulation may require.

The Commission’s regulations implementing the statute provide that “[n]o person in the 

 52 2 F.M.C.2d
United States may arrange, offer, advertise or provide passage on a vessel unless a Certificate 

(Performance) has been issued to or covers such person.” 46 C.F.R. § 540.3. The Commission 

has held that the purpose of this provision is, “to prevent financial loss and hardship to the 

American traveling public, who, after payment of cruise passage money, are stranded by the 

abandonment or cancellation of a cruise.” Terry Marler and James Beasley dba Titanic 

Steamship Line, 22 S.R.R. 359, 369 (ALJ 1983), aff’d, 22 S.R.R. 798 (FMC 1984). 

The Commission’s regulations at 46 C.F.R. § 540.8(b) further provide that a Certificate 

(Performance)5 may be denied, revoked, suspended, or modified for any of the following 

reasons: 

(1) Making any willfully false statement to the Commission in connection 

with an application for a Certificate (Performance);

(2) Circumstances whereby the party does not qualify as financially 

responsible in accordance with the requirements of the Commission;

(3) Failure to comply with or respond to lawful inquiries, requests for 

information, rules, regulations, or orders of the Commission pursuant to the rules 

of this subpart.

On October 31, 2019, the Commission issued an order granting a hearing and directing 

Respondent to show cause why its Certificate should not be revoked for four reasons:

(1) Respondent’s false statements regarding its office address establish that 

revocation is proper under 46 C.F.R. § 540.8(b)(1); 

(2) Respondent’s failure to timely submit quarterly independent audits for the 

past three years, as required by the terms of its escrow agreement, establish that 

Respondent is no longer qualified to hold a Certificate within the meaning of 46 

U.S.C. § 44102 and 46 C.F.R. § 540.8(b)(2); 

(3) Respondent’s failure to remain a Limited Liability Company in good 

standing with its state’s authority, as warranted in its escrow agreement, establish 

that Respondent is no longer qualified to hold a Certificate within the meaning of 

46 U.S.C. § 44102 and 46 C.F.R. § 540.8(b)(2) and 

(4) Respondent’s failure to comply with information and document requests 

by Commission staff establish that revocation is proper under 46 C.F.R. 

§ 540.8(b)(3). 

Hearing Order, 84 Fed. Reg. at 59810. 

5 This proceeding involves Respondent’s Certificate (Performance). It does not implicate 

Respondent’s proof of financial responsibility to meet liability incurred for death or injury to passengers, 

which involves a Certificate (Casualty). Compare 46 C.F.R. § 540.1 with 46 C.F.R. § 540.20.

 53 2 F.M.C.2d
Each of these bases for revocation is discussed below.

1. Section 540.8(b)(1) 

Commission regulations state that a performance certificate may be revoked for 

“[m]aking any willfully false statement to the Commission in connection with an application for 

a Certificate (Performance).” 46 C.F.R. § 540.8(b)(1). The Hearing Order alleges that 

Respondent’s “false statements regarding its office address” constitute grounds for revocation 

under this regulation. 84 Fed. Reg. at 59810. 

Respondent argues that the Commission is being hyper-technical and insists that its 

mailing address of 700 Churchhill Parkway never changed. Resp’t Mem. at 4. According to 

Respondent, it physically “relocated because it has no employees other than Christopher Kyte, 

who is the Chairman of the Board.” Id. Respondent further contends that it has “always 

maintained its FMC-approved Escrow Account at KeyBank N.A. and all passengers have been 

refunded the cancelled cruises.” Id.

Respondent’s only evidence of its address is the affidavit of Mr. Kyte, who avers that the 

700 Churchill Parkway address is active and points out that this is the address on the Louisiana 

Secretary of State website. Kyte Aff. ¶ 17. According to Kyte, Respondent “had no employees 

working there due to the fact” that the absence of funding “necessitated letting staff go.” Id. He 

also states in his affidavit that he gave BCL a temporary physical address, and Respondent’s 

email address has not changed. Id. ¶ 18. 

BOE counters that Respondent provides no evidence to support the claim that 700 

Churchill Parkway is a working mailing address, and it provides evidence that the address is no 

longer active. Among other things, a Commission Area Representative visited the address and 

did not find Respondent, there are numerous examples of undelivered mail and failed service, 

and an email from the director of facilities at 700 Churchill Parkway states that Respondent left 

the address in November 2017. BOE Reply at 6, 9-10. 

Although the preponderance of the evidence favors BOE’s argument that 700 Churchill 

Parkway is not Respondent’s mailing address, revocation under § 540.8(b)(1) has not been 

established. Section 540.8(b)(1) does not say that a certificate can be revoked for making a false 

statement, but rather for making a “willfully false statement in connection with an application.” 

(emphasis added). In the instant matter, BCL records indicate that when Respondent filed its 

application for a certificate, it listed 700 Churchill Parkway, Avondale, Louisiana 70094 as its 

address. Resp’t Ex. 1. Respondent also entered into the Escrow Agreement using the 700 

Churchill Parkway address. BOE Ex. G at BOE0152. There is no allegation or evidence that at 

the time of the application and at the time of the signing of the Escrow Agreement, 700 Churchill 

Parkway was not the address of the Respondent. That is, there is no evidence that Respondent 

made willfully false statements about its address in connection with its application for a 

certificate.

BOE argues that a business address is a vital piece of information and that the 

“Commission’s regulations require that address information be accurate and updated with every 

change.” BOE Reply at 9 (emphasis added). But revocation under § 540.8(b)(1) must involve 

 54 2 F.M.C.2d
false statements in connection with an application; it says nothing about apprising the 

Commission about changed information.6 Further, BOE does not cite any regulation requiring a 

PVO to notify the Commission if its address changes.7 Commission regulations do require a 

PVO to amend an application in the event that there are “material changes” to the facts reflected 

in an application. 46 C.F.R. § 540.4(g). But the regulations define “material changes” as those 

which: (1) result in a decrease in the amount submitted to establish financial responsibility to a 

level below that required to be maintained; or (2) require that the amount to be maintained be 

increased above the amount submitted to establish financial responsibility. Id. A change in 

address is not a material change that implicates the duty to amend. Id.8

In sum, while it is likely that Respondent has misled the Commission about the accuracy 

of its mailing address, a misleading statement is not enough to revoke a certificate under 

§ 540.8(b)(1). Therefore, Respondent’s statements regarding its office address do not justify 

revocation under § 540.8(b)(1). 

2. Section 540.8(b)(2) 

Under § 540.8(b)(2), the Commission may revoke a Certificate (Performance) for 

“[c]ircumstances whereby the party does not qualify as financially responsible in accordance 

with the requirements of the Commission.” 46 C.F.R. § 540.8(b)(2). There is little guidance on 

what these circumstances are, and the regulation is unchanged from its initial adoption in 1967. 

The regulations themselves, however, provide some context. Section 540.8(a) provides that 

“[r]egardless of a hearing, a Certificate (Performance) shall become null and void upon 

cancellation or termination of the . . . escrow account.” “[C]ircumstances whereby the party does 

not qualify as financially responsible,” therefore, are not limited to situations where a PVO’s 

escrow account is terminated – otherwise § 540.8(b)(2) would be superfluous in light of § 

540.8(a). There must therefore be some circumstances that permit revocation under § 540.8(b)(2) 

other than termination of the escrow account itself.

6 In the Commission’s 1966 proposed rule implementing Public L. No. 89-777, the equivalent of 

§ 540.8(b)(1) provided that a certificate could be revoked for making “any willfully false statement to the 

Commission in connection with an application for a Certificate (Performance) or its continuance in 

effect.” NPRM: Security for Protection of Public, 31 Fed. Reg. 15703, 15705 (Dec. 13, 1966) (emphasis 

added). This italicized language was omitted from the final rule. Final Rule: Security for Protection of the 

Public, 32 Fed. Reg. 3986, 3989 (Mar. 11, 1967). The removal of this language suggests the intention to 

limit this ground for revocations to false statements in connection with applications for certificates.

7 Other regulated entities like OTIs and foreign-based unlicensed NVOCCs are required to notify 

BCL of changes in addresses, but no similar provision exists in Part 540. See 46 C.F.R. §§ 515.20(e), 

515.19(f).

8 Section 540.9(h) requires certificate holders to “submit to the Commission a semi-annual 

statement of any changes with respect to the information contained in the application or documents 

submitted in support thereof or a statement that no changes have occurred.” This provision, however, is 

not referenced in any submission by BOE, and there has been no allegation that Respondent failed to 

comply with it.

 55 2 F.M.C.2d
a. Failure to Submit Timely Audit Reports 

The first circumstance alleged to justify revocation under 46 C.F.R. § 540.8(b)(2) is 

Respondent’s “failure to timely submit quarterly independent audits for the past three years, as 

required by the terms of its escrow agreement.” Hearing Order, 84 Fed. Reg. at 59810. 

Respondent concedes that it was “on occasion” “dilatory in providing information and 

document[s] to” the Commission, including requested reports. Resp’t Mem. at 3-4. It argues, 

however, that revocation is not justified because: (1) it was dilatory because it was temporarily 

effectively out of business; (2) it was in regular written and telephonic communication with the 

Commission; (3) it filed the required recomputation certificates; (4) its quarterly audits are 

current through June 30, 2018, although the Commission rejected them on technical grounds; 

and (5) the Commission is aware that there is nothing to audit because there are no passenger 

deposits, given that Respondent stopped taking them as of October 2017. Id. at 4.

BOE counters that Respondent has failed to comply with audit requirements of its 

Escrow Agreement. BOE Reply at 11. BOE further argues that any audit reports submitted by 

Respondent could not be relied upon because they were not in accordance with Louisiana law or 

generally accepted accounting procedures. BOE Reply at 10. BOE also suggests that Respondent 

should not be able to unilaterally determine which aspects of the Escrow Agreement it follows 

by stating that it is a dormant PVO. Id. at 12.

BOE has established that Respondent’s failure to timely submit the audit reports as 

required by the Escrow Agreement constitute “circumstances whereby the party does not qualify 

as financially responsible in accordance with the requirements of the Commission” under 

§ 540.8(b)(2). It is undisputed that the Respondent failed to timely file any of its quarterly audit 

reports, including the 2016 4th Quarter Audit, and all the 2017, 2018, and 2019 quarterly audits. 

Singletary Aff. ¶ 7. 

These are not simply technical failures. Rather, they threaten to thwart the purpose of 

escrow accounts and undermine the Commission’s ability to ensure that Respondent has the 

resources in place to protect passengers. See, e.g., Royal Venture Cruise Line, Inc., Order of 

Investigation, 61 Fed. Reg. 58413, 58413 (Nov. 14, 1996) (“When a passenger vessel operator 

relies upon an Escrow Agreement to establish its financial responsibility, the Commission must 

have accurate, credible and reliable information concerning the collection of passenger deposits 

and fares to ensure the protection of passengers and the integrity of the Escrow Agreement.”). 

Unlike surety bonds, which involve a third-party surety guaranteeing compensation to 

passengers, the escrow account process relies on the PVO itself to ensure that it maintains 

adequate funds in escrow. This makes it vital for PVOs such as Respondent to comply with the 

Escrow Agreement. Its repeated failure to do so here demonstrates that it can no longer be 

considered financially responsible.

Respondent’s arguments are unpersuasive. Respondent’s justification for its untimely 

submission of documents – that it was temporarily out of business – is no valid excuse. The 

passenger vessel responsibility requirements were put in place to protect passengers in situations 

such as insolvency. See Wall Street Cruises Inc. – Failure to Qualify for Performance 

Certificate, 12 S.R.R. 950, 952 (FMC 1972) (“In enacting PL 89-777, Congress expressed its 

intent to insure that the traveling public be protected from financial loss at the hands of vessel 

 56 2 F.M.C.2d
owners and operators or other persons booking transportation on oceangoing vessels”). As for 

Respondent’s “constant” communication with the Commission, this is not a mark in 

Respondent’s favor. The communication was necessitated by Respondent’s inability to timely 

submit documents or accurately respond to customers. See, e.g., Singletary Aff. ¶¶ 16, 18, 20, 

28; Haynes Aff. ¶¶ 13, 18; Kusumoto Aff. ¶ 7; BOE Ex. B (Johnson Aff.) Aff. ¶¶ 5, 8; BOE Ex. 

H at BOE0165-BOE0172; BOE Ex. M at BOE0229-BOE0305. 

As for the recomputation certificates, Respondent argues that while it was delinquent, 

they have all been provided. Kyte Aff. ¶ 14. But late compliance is still non-compliance, and it 

took the repeated efforts of BCL to obtain these and other documents from Respondent. See, e.g.,

Johnson Aff. ¶8; Singletary Aff. ¶ 20; Haynes Aff. ¶18. 

Most concerning is Respondent’s contention that it did not need to submit recomputation 

certificates or quarterly audits to the Commission after it stopped taking passenger deposits in 

October 2017. Kyte Aff. ¶13 (“As of October 2017, [Respondent] was no longer advertising or 

taking deposits, . . . . Accordingly, there was no activity to audit and the weekly recomputations 

since then have shown no activity.”); id. ¶ 14 (“In this regard, once [Respondent] stopped 

marketing and collecting deposits, it stopped preparing recomputation certificates.”); Resp’t 

Mem. at 4 (“The Commission is fully aware of the fact that there is nothing for an auditor to 

review since there are no deposits.”). The Escrow Agreement requires submission of these 

documents, and Respondent cites no authority that would permit it to unilaterally cease 

compliance.

Further, the Commission has previously required compliance even when operators are not 

accepting money. In Wall Street Cruises, the Commission found that the active collection of 

fares is not crucial to finding a violation of PL 89-777. 12 S.R.R. at 953. There the operator was 

advertising for a cruise without a certificate and the Commission found a violation and issued a 

cease and desist order even though the respondent had not collected any deposits. Id. Similarly, 

Respondent in this case is not freed from its obligation to follow the terms of the Escrow 

Agreement merely because it is not accepting deposits.

Respondent points out that its “quarterly independent audit reports were current through 

June 30, 2018,” but rejected by the Commission on technical grounds. Resp’t Memorandum. 

Respondent does not challenge BCL’s basis for rejecting the audit. But Mr. Kyte, Respondent’s 

chairman, suggests in his affidavit that BCL’s rejection of the audit reports was unjustified 

because: (a) BCL staff told Mr. Toujouse that he could perform the audit and then rejected the 

audit report because Mr. Toujouse was not a CPA, Kyte Aff. ¶ 15; and (b) when Respondent 

subsequently engaged a CPA and asked BCL for guidance or an example on how the audit 

should be formatted, BCL said there was no guidance or example, causing the CPA to decline to 

prepare a report, Kyte Aff. ¶ 16. 

These contentions are unsubstantiated. The only reference to Commission staff approving 

the use of Mr. Toujouse as auditor is in the affidavit of Mr. Kyte. Kyte Aff. ¶ 15. Respondent did 

not submit an affidavit from Mr. Toujouse, nor did Mr. Haynes mention the event is his affidavit. 

Mr. Kyte’s statement about what Mr. Haynes told Mr. Toujouse is likely inadmissible hearsay. 

See 46 C.F.R. § 502.204(a); Fed. R. Evid. 802. There is no other evidence substantiating this 

telephone call. As for Respondent’s claim that it had an auditor lined up but the Commission 

 57 2 F.M.C.2d
declined to provide audit guidance, Kyte Aff. ¶ 16, Mr. Haynes’s affidavit does not mention this. 

Rather, he describes a phone call with a different auditor about audit requirements, and Mr. 

Haynes told the auditor that the requirements were outlined in the Escrow Agreement, that he 

needed to seek appropriate information from Respondent, and that he needed a signed 

engagement letter. Haynes Aff. ¶ 19.

Finally, even if BCL should not have rejected the August 23, 2018, audit report, BCL 

informed Respondent that it was not in compliance on February 6, 2019, and gave Respondent 

two months to furnish a compliant audit report. BOE Ex. M at BOE0288. Respondent did not 

comply by the deadline. Additionally, Respondent does not explain how these events are related 

to or justify its failure to timely file the other quarterly audit reports. Per the terms of the Escrow 

Agreement, Respondent was required to submit an additional audit report on November 14, 

2018, but it failed to do so. Singletary Aff. ¶ 7. This was prior to being told by BCL that the 

submitted reports were unacceptable. Kusomoto Aff. ¶ 7. As noted above, the Respondent also 

failed to submit any of the audit reports for 2019. Singletary Aff. ¶ 7. 

The Escrow Agreement is evidence of the financial responsibility of Respondent and in 

the instant matter, Respondent has not complied with the requirements of the Agreement since 

2017 and remains out of compliance. As a result, circumstances exist whereby Respondent does 

not qualify as financially responsible, and grounds for revocation exist under 46 C.F.R. 

§ 540.8(b)(2). 

b. Respondent’s Standing with the Louisiana Secretary of State

The second circumstance alleged to justify revocation under § 540.8(b)(2) is 

Respondent’s “failure to remain a Limited Liability Company in good standing with its state’s 

authority, as warranted in its escrow agreement.” Hearing Order, 84 Fed. Reg. at 59810. 

Respondent does not address this allegation in its memorandum other than to state that “[i]t is a 

company in good standing with the State of Louisiana.” Resp’t Mem. at 4. BOE in reply notes 

that although Respondent was not in good standing with the Louisiana Secretary of State in 

October 2019, it renewed its good standing on November 22, 2019. BOE Reply at 7. BOE does 

not otherwise argue that the good-standing issue justifies revocation.

As noted above, compliance with the terms of escrow agreements is vital to escrow 

accounts serving their purpose under the Commission’s PVO financial responsibility program. In 

the Escrow Agreement, Respondent warranted and represented that it was in good standing. BOE 

Ex. G at BOE0156. But temporary failure to maintain good standing does not to justify, standing 

alone, revocation of a PVO certificate. The link between Respondent’s conduct – failing to 

maintain good standing – and its qualification as financially responsible is attenuated, or at least 

not clear. The record indicates that Respondent lost its good-standing status because it failed to 

file its annual report after May 29, 2018. BOE Ex. K. There is no clear link between this error 

and Respondent’s financial responsibility within the meaning of 46 U.S.C. § 44102 and 46 

C.F.R. § 540.8(b)(2). 

 58 2 F.M.C.2d
3. Respondent’s failure to comply with information and document requests

The final ground for revocation alleged in the Hearing Order is Respondent’s failure to 

comply with information and document requests by Commission. 84 Fed. Reg. at 59810. Section 

540.8(b)(3) of the Commission’s regulations allowsfor the revocation of a certificate for 

“[f]ailure to comply with or respond to lawful inquiries, requests for information, rules, 

regulations, or orders of the Commission pursuant to the rules of this subpart.” 46 C.F.R. 

§ 540.8(b)(3). 

As noted above, Respondent concedes that it submitted documents in an untimely fashion 

but asserts that it has been in “continuous written communications and verbal communications 

with the FMC” and has kept the Commission advised as to its current status. Resp’t Mem. at 2-3. 

In its reply, BOE states that Respondent’s equitable arguments do not provide good cause to 

avoid revocation. BOE Reply at 11. BOE also stresses the importance of the documents 

requested to the Commission’s assessment of Respondent’s financial responsibility. Id. at 12.

BOE has established that Respondent has failed to “comply with or respond to lawful 

inquiries, requests for information, rules, regulations, or orders of the Commission.” 46 C.F.R. § 

540.8(b)(3). Even if one discounts the untimely submission of recomputation certificates, 

Respondent failed to respond in a timely fashion, or respond at all, to many direct requests and 

inquires made by the Commission. In January and February 2018, Respondent failed to provide 

corrections to discrepancies in passenger refund lists as requested by Commission staff. Haynes 

Aff. ¶ 13. Also, in February 2018, Respondent failed to provide all the requested documents 

connected with a remote review of Unearned Passenger Revenue. BOE Ex. A at BOE0105. In 

February 2019, Respondent was advised to submit corrections to its audit reports by April 8, 

2019. Respondent has still not submitted these reports. Kusumoto Aff. ¶ 7. 

Commission staff also inquired about whether the 700 Churchill Parkway address was a 

working address on several occasions. Though Respondent continues to assert it is a working 

mailing address, there exists significant doubt as to whether this remains a mailing address for 

Respondent. BCL has been unable to send mail to this address for Respondent and the building 

manager of this address stated that Respondent left the premises in November 2017.

The Commission has previously found that failure to respond to Commission requests for 

information or documents warrants action under 46 C.F.R. § 540.8(b). In Royal Venture Cruise 

Line, an operator was denied a certificate when it was found, among other issues, that it, “misled 

and failed to comply with lawful inquires by the Commission’s staff.” 27 S.R.R. at 1074. In that 

case, the Commission ultimately denied the operator’s application for a certificate. Id. at 1073. 

Respondent cites communication with the Commission regarding his compliance as a 

defense. However, communication with the Commission about coming into compliance does not 

remove the obligation of complying with Commission regulations. The Commission has 

previously corresponded with parties it believes may be in violation of the Part 540 

requirements. See Royal Venture, 27 S.R.R. at 1077 (operator received at least three warning 

letters from Commission staff urging him to come into compliance).

Additionally, while Respondent did respond to some Commission inquires and often 

 59 2 F.M.C.2d 2 F.M.C.2d
requested extensions of deadlines, many of these deadlines were broken and there remain several 

outstanding unfilled requests and inquiries from the Commission. The record establishes that 

Respondent has failed to comply with document requests and inquiries from the Commission, 

and revocation is proper under 46 C.F.R. § 540.8(b)(3). 

C. Appropriate Sanction

Because grounds for revocation exist under 46 C.F.R. § 540.8(b)(2) and (3), the question 

is whether the Commission should revoke Respondent’s Certificate or take some lesser action, or 

no action. Section 540.8(b) is permissive and contemplates sanctions other than revocation: “A 

Certificate (Performance) may be denied, revoked, suspended, or modified” if grounds exist. 

(emphasis added). 

Respondent states that its “preference” is “that it not surrender its Performance 

Certificate” even though its vessel is not engaged in passenger cruises and it is not being 

marketed or advertised. Resp’t Mem. at 4-5; Kyte Aff. ¶ 20 (“At the present time [Respondent] 

has no intention of offering any cruises, and is not marketing/advertising the Louisiane as a 

passenger cruise vessel.”). According to Respondent, it intends to return the vessel to the river 

cruise ship market in the future and wishes to remain in good standing with the Commission. 

Kyte Aff. ¶ 21. At the same time, however, Respondent does not want to be obligated to 

complete weekly recomputation certificates and quarterly audits when it is not advertising the 

vessel and it cannot serve as a cruise vessel currently. Id.

Respondent asserts that it is and always has been financially responsible. Respondent also 

points out in its submissions that all passenger monies had been paid into the Escrow Account, 

and that all passenger deposits were returned after the cruises were cancelled. Resp’t Mem. at 2, 

5; Kyte Aff. ¶ 9 (“There is not a single passenger who was not refunded.”). 

BOE does not address the suspension argument directly, but notes that Respondent’s 

desire to not comply with Commission regulations because it is not currently providing 

passenger services but still keep its Certificate so it can resume services without having to 

reestablish financial responsibility is “intrinsically contradictory.” BOE notes not only 

Respondent’s “numerous and repeated compliance failures,” but also points out that:

• BCL had to work with Respondent to correct misrepresentations to 

passengers about the refund process. BOE Reply at 12 (citing BOE Ex. H 

at BOE0163-BOE0166); 

• At the time of the issuance of the Hearing Order, Respondent’s website 

continued to advertise its line and vessel as a river cruise vessel despite 

Respondent’s claim that it is not advertising. BOE Reply at 13-14 (citing 

BOE Ex. I); and 

• “[M]ultiple complaints” about Respondent have been made to industry 

advocates, the news media, and the Commission (BOE Reply at 15).

The record establishes that Respondent has engaged in numerous actions and inactions 

that warrant revocation rather than suspension. As BOE notes, the ultimate purpose of the 

 60 2 F.M.C.2d 2 F.M.C.2d
financial responsibility regulations is to “ascertain, from past experience and present resources, 

whether there is a reasonable assurance that future passengers will not be stranded and left 

without financial recourse in the event of nonperformance of transportation.” Pac. Far East Line, 

17 S.R.R. at 1548. Although Respondent’s passengers received their deposits back, doing so 

required substantial assistance from BCL. Respondent’s history of noncompliance with the 

Escrow Agreement and Commission regulations gives little assurance that it will act 

appropriately in the future. Finally, nothing prevents Respondent from reapplying for a 

certificate if it offers cruises again.

III. CONCLUSION

For the reasons set forth above, grounds for revocation exist under 46 C.F.R. § 540.8(b), 

and we therefore REVOKE Respondent’s performance certificate. 

By the Commission. 

Rachel E. Dickon 

Secretary

 61 2 F.M.C.2d 2 F.M.C.2d
FEDERAL MARITIME COMMISSION

M/S. PARSONS OVERSEAS,Claimant

v.

SEVEN SEAS SHIPPING USA,INC., Respondent.

INFORMAL DOCKET NO. 

1960(I)

Served: March 30, 2020

NOTICE NOT TO REVIEW

Notice is given that the time within which the Commission could determine to review the 

Small Claims Officer’s February 26, 2020 Order Granting Voluntary Dismissal has expired. 

Accordingly, the decision has become administratively final.

Rachel E. Dickon

Secretary

 62 2 F.M.C.2d 2 F.M.C.2d
FEDERAL MARITIME COMMISSION

INTERNATIONAL OCEAN TRANSPORTATION SUPPLY CHAIN 

ENGAGEMENT FACT FINDING NO. 29 

Served: March 31, 2020 

ORDER

Pursuant to the Shipping Act of 1984, 46 U.S.C. 40101 et seq. (Shipping Act), the 

Federal Maritime Commission (Commission) is charged with regulating the U.S. international 

ocean transportation system that supports the transportation of goods by water in the foreign 

commerce of the United States (“liner service”). The purposes of the Shipping Act include the 

requirements to “provide an efficient and economic transportation system in the ocean commerce 

of the United States that is, insofar as possible, in harmony with, and responsive to, international 

shipping practices,” and also “to promote the growth and development of United States exports 

through competitive and efficient ocean transportation and by placing a greater reliance on the 

marketplace.” 46 U.S.C. § 40101. 

Maintaining the effectiveness and reliability of the global freight delivery system is 

critically important to the Nation’s continued economic vitality. Unfortunately, congestion and 

bottlenecks at ports and other points in the Nation’s supply chain have become a serious risk to 

the growth of the U.S. economy, job growth, and to our Nation’s competitive position in the 

world. 

In 2016, in response to challenges created by unresolved supply chain issues, the 

Commission convened teams of industry leaders to develop process innovations that would 

enhance supply chain reliability and resilience. Each of the teams was composed of members 

representative of the supply chain, including public port authorities, marine terminal operators, 

beneficial cargo owners, ocean transportation intermediaries, liner shipping companies, drayage 

trucking companies, longshore labor representatives, rail officials and chassis providers. The 

conclusions of these meetings were summarized and developed into a final report issued in 

December 2017.

Recent global events have only highlighted the economic urgency of responsive port and 

terminal operations to the effectiveness of the United States international freight delivery system.

Given the Commission’s mandate to ensure an efficient and economic transportation system for 

ocean commerce, the Commission has a clear and compelling responsibility to actively respond 

to current challenges impacting the global supply chain and the American economy. 

Accordingly, the Commission has determined there is a compelling need to convene new supply 

chain innovation teams to address these challenges.

 63 2 F.M.C.2d 2 F.M.C.2d
THEREFORE IT IS ORDERED, That, pursuant to 46 U.S.C. §§ 41302, 40302, 41101 to 41109, 

41301 to 41309, and 40104, and 46 C.F.R. § 502.281 et seq., Commissioner Rebecca F. Dye 

engage supply chain stakeholders in public or non-public discussions to identify commercial 

solutions to certain unresolved supply chain issues that interfere with the smooth operation of the 

U.S. international supply chain; 

IT IS FURTHER ORDERED, That, the Commissioner form one or more supply chain 

innovation teams, composed of leaders from all commercial sectors of the U.S. international 

supply chain, to develop commercial solutions to port congestion and related supply chain 

challenges; 

IT IS FURTHER ORDERED, That, the Commissioner provide periodic updates to the 

Commission on the results of efforts undertaken by this Order; 

IT IS FURTHER ORDERED, That, the Commissioner have full authority under 46 C.F.R. 

§§ 502.281 to 502.291, to perform such duties as may be necessary in accordance with U.S. law 

and Commission regulations. The Commissioner will be assisted by staff members as may be 

assigned by the Chairman; 

IT IS FURTHER ORDERED, That, this Proceeding be discontinued as ordered by the 

Commission; and

IT IS FINALLY ORDERED, That, notice of this Order be published in the Federal Register. 

By the Commission. 

Rachel E. Dickon 

Secretary

 64 2 F.M.C.2d 2 F.M.C.2d
FEDERAL MARITIME COMMISSION

TEMPORARY EXEMPTION FROM CERTAIN SERVICE 

CONTRACT REQUIREMENTS DOCKET NO. 20-06

Served: April 27, 2020

BY THE COMMISSION: Michael A. KHOURI, Chairman, Rebecca F. DYE, Daniel B. 

MAFFEI, Louis E. SOLA, and Carl W. BENTZEL Commissioners.

ORDER GRANTING EXEMPTION

The coronavirus disease 2019 (COVID-19) has highlighted the economic significance of 

maintaining the effectiveness and reliability of the global freight delivery system and has placed 

increased stresses and burdens on carriers and their customers. The pandemic has also, in some 

instances, made continued compliance with certain Federal Maritime Commission regulations 

especially burdensome.

More specifically, an increasing number of businesses have been working remotely as a 

result of social distancing guidance and stay-at-home orders. The Commission understands that 

for some entities, this situation, combined with other COVID-19-related disruptions to 

commercial operations, has made complying with service contract filing requirements difficult.

In particular, 46 C.F.R. § 530.8(a)(1) requires that carriers file original service contracts

(as opposed to an amendment) with the Commission “before any cargo moves pursuant to that 

service contract.” In addition, § 530.8(b) requires that each original contract include, among 

other terms, an effective date that is no earlier than the filing date. See §§ 530.3(i) (defining 

“effective date” for original service contracts and amendments); 530.8(b)(8)(i) (requiring every 

service contract to include its effective date). Similarly, § 530.14(a) provides that “[p]erformance 

under an original service contract may not begin before the day it is effective and filed with the 

Commission.”

In contrast, the Commission’s regulations provide more flexibility to service contract 

amendments, which can be filed within 30 days after the amendment’s effective date. See 

§§ 530.3(i); 530.8(a)(2); 530.8(b)(8)(i); 530.14(a).

The Commission believes that a temporary blanket exemption extending the current 

filing flexibilities for service contract amendments to original service contracts will allow parties 

time to adapt to the increased pressures that have been placed upon them by COVID-19 and 

minimize disruptions to the contracting process.

 65 2 F.M.C.2d 2 F.M.C.2d
Exemptions from the requirements of Part 530 are governed by 46 C.F.R. § 530.13(b). 

Under this authority, the Commission may exempt any specified activity of persons subject to 

the Shipping Act from the requirements of Part 530 if the Commission finds that the exemption 

will not result in substantial reduction in competition or be detrimental to commerce. § 530.13(b) 

(incorporating 46 U.S.C. § 40103(a) and 46 C.F.R. §§ 502.10, 502.92).

The Commission has previously allowed for exemptions from the service contract 

regulations in exigent circumstances where the exemption meets the criteria in 46 U.S.C. 

§ 40103(a). See Pet. of Maersk Line A/S for an Exemption from 46 C.F.R. § 530.8, Pet. No. P1-

17 (FMC July 19, 2017); Petition of COSCO Container Lines Company Ltd., 34 S.R.R. 97 (FMC 

2016); Petition of Crowley Caribbean Servs., LLC, 33 S.R.R. 1461 (FMC 2016); Petition of 

Compañía Sud Americana de Vapores S.A., 33 S.R.R. 934 (FMC 2015); Petition of Hanjin 

Shipping Co., Ltd., 31 S.R.R. 1080 (FMC 2009).

The Commission similarly concludes that a temporary exemption from certain 

requirements for original service contracts in §§ 530.3, 530.8, and § 530.14, subject to certain 

conditions, will reduce the filing burdens on the industry and will not result in a substantial 

reduction in competition or be detrimental to commerce. This temporary exemption is limited to 

a small subset of the Commission’s service contract regulations in order to allow the industry to 

meet the challenges that the global pandemic has placed upon it. This exemption is subject to the 

condition that original service contracts continue to be filed with the Commission. As is the case 

for service contract amendments, however, that filing may now be delayed up to 30 days after 

the effective date. This exemption is also temporary and will remain in effect only until 

December 31, 2020.1 The Commission has determined that these conditions will minimize any 

potential negative effects on competition or commerce.

Although the Commission’s Rules of Practice and Procedure normally require notice and 

an opportunity for a hearing be afforded to interested parties (including publication in the Federal 

Register of a notice of the proposed exemption and request for comments), see 46 C.F.R. 

§ 502.92(c)-(d); 530.13(b) (cross-referencing § 502.92), the Commission may waive these 

requirements for regulatory exemptions to prevent undue hardship, manifest injustice, or if the 

expeditious conduct of business so requires. See 46 C.F.R. §§ 502.10; 530.13(b) (crossreferencing § 502.10). Given the immediate need for regulatory relief in light of the COVID-19 

pandemic and its effects on commercial operations, the Commission has determined that waiving 

the notice and hearing requirements in § 502.92 is necessary to prevent undue hardship and is 

required for the expeditious conduct of Commission business.

THEREFORE IT IS ORDERED, That a temporary exemption from the requirements of 46 

C.F.R. §§ 530.3(i); 530.8(a)(1), (b)(8)(i); and 530.14(a) for original service contracts is 

GRANTED, provided that:

1. Authorized persons must file with the Commission, in the manner set forth in 

appendix A of 46 C.F.R. part 530, a true and complete copy of every original 

service contract no later than thirty (30) days after any cargo moves pursuant to 

1 The Commission may consider extending this exemption as necessary to address the continuing 

effects of the COVID-19 pandemic.

 66 2 F.M.C.2d 2 F.M.C.2d
that service contract amendment;

2. Every original service contract filed with the Commission must include the 

effective date, which may be no more than thirty (30) calendar days prior to the 

filing date with the Commission; and

3. Performance under an original service contract may not begin until the day it is 

effective, provided that the service contract is filed with the Commission no later 

than thirty (30) calendar days after the effective date.

IT IS FURTHER ORDERED, That this temporary exemption will remain in effect until 

December 31, 2020.

By the Commission.

Rachel E. Dickon

Secretary

 67 2 F.M.C.2d 2 F.M.C.2d
FEDERAL MARITIME COMMISSION

COVID-19 IMPACT ON CRUISE INDUSTRY

FACT FINDING NO. 30 

Served: April 30, 2020 

BY THE COMMISSION: Michael A. KHOURI, Chairman, Rebecca F. DYE, Daniel B. 

MAFFEI, Louis E. SOLA, and Carl W. BENTZEL Commissioners. 

ORDER

Congress tasked the Federal Maritime Commission (Commission) with administering the 

Shipping Act of 1984 (Shipping Act), 46 U.S.C. § 40101 et seq. The Commission also 

administers Public Law 89-777, 46 U.S.C. § 44101 et seq., to ensure that passenger vessel 

operators (PVOs) satisfy the financial responsibility requirements related to nonperformance of 

transportation and death or injury to passengers.

The purposes of the Shipping Act include the provision of “an efficient and economic 

transportation system in the ocean commerce of the United States that is, insofar as possible, in 

harmony with, and responsive to, international shipping practices.” 46 U.S.C. § 40101. Pursuant 

to the Shipping Act, the Commission regulates ocean common carriage of the United States.

When they are engaged in transportation of passengers between the U.S. and a foreign country, 

PVOs are common carriers under the Shipping Act. See 46 U.S.C. § 40102(7)(A). 

PVOs are also subject to the requirements of 46 U.S.C. chap. 441 and regulations 

promulgated thereunder in 46 C.F.R. part 540. The purpose of that statute is, among other things, 

“to prevent financial loss and hardship to the American traveling public, who, after payment of 

cruise passage money, are stranded by the abandonment or cancellation of a cruise.” Terry 

Marler and James Beasley dba Titanic Steamship Line, 22 S.R.R. 359, 369 (ALJ 1983), aff’d, 22 

S.R.R. 798 (FMC 1984). 

The Commission understands that the current pandemic caused by the novel coronavirus 

(COVID-19) has severely impacted the cruise industry. On March 14, 2020, the Centers for 

Disease Control and Prevention (CDC) issued a No Sail Order and Suspension of Further 

Embarkation causing PVOs to cease all operations. Due to the unpredictable nature of this 

disease, the CDC has extended the term of the order demonstrating the uncertainty associated 

with this pandemic. Consequently, questions concerning future travel and passengers’ ability to 

obtain refunds of monies remitted for transportation disrupted by COVID-19 are legion.

 68 2 F.M.C.2d 2 F.M.C.2d
The cruise industry plays a unique and important role in the U.S. economy. Given the 

Commission’s mandate to: (1) ensure an efficient and economic transportation system for ocean 

commerce for both goods and passengers under the Shipping Act; and (2) ensure that PVOs 

maintain adequate financial responsibility to indemnify passengers for nonperformance and meet 

any liability which may be incurred for death or injury to passengers or other persons under 46 

U.S.C. chap. 441, the Commission has a clear and compelling responsibility to actively

investigate and respond to the current challenges impacting the cruise industry and the U.S. ports 

that rely on it.

1

THEREFORE IT IS ORDERED, That, pursuant to 46 U.S.C. §§ 40104, 41101-41109, 41301-

41309, 44104-44106 and 46 C.F.R. § 502.281 et seq., Commissioner Louis E. Sola engage cruise 

industry stakeholders, including PVOs, passengers, and marine terminal operators, in public or 

non-public discussions to identify commercial solutions to COVID-19-related issues that 

interfere with the operation of the cruise industry;

IT IS FURTHER ORDERED, That, the Commissioner form one or more teams, composed of 

leaders from the cruise industry and other stakeholders, to develop commercial solutions to the 

challenges created by the COVID-19 pandemic;

IT IS FURTHER ORDERED, That the Commissioner interact with any or all maritime related 

COVID-19 task forces of which this Commission is affiliated or monitorsfor the purpose of 

collecting data related to COVID-19 and its impact on the cruise industry; 

IT IS FURTHER ORDERED, That, the Commissioner provide a preliminary report and periodic 

updates to the Commission on the results of efforts undertaken by this Order; 

IT IS FURTHER ORDERED, That, the Commissioner have full authority under 46 C.F.R. §§ 

502.281-291 to perform such duties as may be necessary in accordance with U.S. law and 

Commission regulations. The Commissioner will be assisted by staff members as may be 

assigned by the Chairman; 

IT IS FURTHER ORDERED, That, this Proceeding be discontinued upon the acceptance of a 

final report and possible recommendations by the Commissioner, unless otherwise ordered by 

the Commission; and

IT IS FINALLY ORDERED, That, notice of this Order be published in the Federal Register. 

By the Commission. 

Rachel E. Dickon 

Secretary

1 The provisions of the Shipping Act govern proceedings under 46 U.S.C. chap. 441. See 46 U.S.C. 

§ 44106.

 69 2 F.M.C.2d 2 F.M.C.2d
FEDERAL MARITIME COMMISSION

Office of Administrative Law Judges

MUHAMMAD RANA, Complainant

v. 

MICHELLE FRANKLIN, D.B.A. “THE RIGHT MOVE” INC., 

Respondent. 

DOCKET NO. 19-03 

Served: May 12, 2020 

BEFORE: Erin M. WIRTH, Chief Administrative Law Judge. 

INITIAL DECISION1

[Exceptions filed by Respondents, 6/15/2020, Commission final decision pending.]

I. INTRODUCTION

A. Overview and Summary of Decision

Complainant Muhammad Rana filed a complaint in this proceeding alleging violations of 

the Shipping Act of 1984 (“Shipping Act”) for failure to pay shipping fees for a shipment of 

household goods from the United States to Pakistan. Respondent Michelle Franklin, doing 

business as The Right Move, Inc. (“The Right Move”), admits that she failed to pay the ocean 

shipping charges, blaming problems with prior shipments, but disputes that the failure was 

willful, that she violated the Shipping Act, and the request for damages. Both parties in this 

proceeding acted pro se, representing themselves.

Respondent refused to fully participate in discovery, participating enough to avoid a 

dismissal or default but not enough to provide meaningful information to Complainant. Because 

Respondent only selectively responded to discovery requests, Complainant was permitted to rely 

on her lack of response as factual support for his case. This unique procedural posture 

distinguishes it from other cases.

As discussed more fully below, the evidence supports a finding that Respondent violated 

section 41102(a) (formerly 10(a)(1)) of the Shipping Act by utilizing unjust or unfair means to 

obtain ocean transportation at less than the rates that otherwise would be applicable.

Complainant withdrew an additional claim of a violation of section 41102(c) based in part on 

online complaints regarding Respondent, stating that the “new and revised rules surrounding the 

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.

 70 2 F.M.C.2d 2 F.M.C.2d
elements of 41102(c) make it overly burdensome to overcome, especially for a pro se

Complainant with no legal background.” Motion to Amend at 1. 

B. Procedural Background

On May 13, 2019, the Commission’s Office of the Secretary served a notice of filing of 

complaint and assignment which required Respondent to respond to the complaint. A timely 

response was not received from Respondent. 

On June 10, 2019, Complainant filed a motion seeking an entry of default and summary 

decision on default. On July 25, 2019, an order to show cause was issued. Respondent filed 

limited responses by email and Complainant filed multiple motions. On October 30, 2019, an 

order denying motions for default and summary decision, to strike, and to compel; discharging the 

show cause order; and a scheduling order (“Order Denying Default and Summary Decision”) was

issued.

On January 6, 2020, an order was issued granting Complainant’s second motion to compel 

and requiring Respondent to answer discovery by January 15, 2020. On January 15, 2020, 

Respondent filed a response to discovery providing limited information and declining to provide 

further details for information she deemed “irrelevant.” On January 23, 2020, Complainant filed a 

motion seeking a finding of facts as a discovery sanction and moving for default decision and 

Respondent filed a response to the motion. 

On February 6, 2020, an order was issued denying Complainant’s motion for finding of 

facts and default decision but permitting Respondent’s failure to provide documents and answer 

interrogatories to support an inference that those responses would have been adverse to her 

interests. On February 12, 2020, an order was issued denying a motion for clarification.

On February 26, 2020, Complainant filed his brief, proposed findings of fact (“CPFF”), 

appendix (“C. App.”), and a motion to amend the complaint. On March 6, 2020, Complainant 

filed a supplement to the motion to amend the complaint. 

On March 17, 2020, Respondent filed her opposition brief and appendix with four 

exhibits. On March 23, 2020, Respondent filed proposed findings of facts (“RPFF”) and an 

expanded appendix with sixteen exhibits (“R. App.”). 

On April 9, 2020, Complainant filed his reply brief. On April 9, 2020, Respondent sent 

an email responding to the reply brief. Although typically not permitted, as Respondent is 

unrepresented, the email will be treated as a sur-reply and will be admitted into the record. The 

Office of the Secretary is hereby requested to include this email in the record as a sur-reply. 

C. Motion to Amend

The Complainant initially alleged a violation of 46 U.S.C. § 41102(c). On September 10, 

2019, Complainant also alleged a violation of 46 U.S.C. § 41102(a). Respondent raised no 

objections to the new allegation. The October 30, 2019, order granted the request to amend the 

complaint to add the section 41102(a) claim. Order Denying Default and Summary Decision at 3.

 71 2 F.M.C.2d 2 F.M.C.2d
On February 26, 2020, Complainant filed a motion to amend the complaint, which states: 

Complainant hereby requests the Honorable Judge to withdraw Complainant’s 

allegation that the Respondent violated 46 USC 41102(c) from the Complaint. 

The new and revised rules surrounding the elements of 41102(c) make it overly 

burdensome to overcome, especially for a pro se Complainant with no legal 

background. 

Furthermore, Respondent’s failure to honor Complainant’s discovery 

coupled with the fact that time for discovery is over, the Complainant has decided 

not to pursue the allegation that the Respondent violated 46 USC 41102(c). 

However, the Complainant will continue to pursue the claim and allegation in this 

complaint that the Respondent violated 46 USC41102(a). 

Motion to Amend at 1. Respondent did not object to the motion to amend. 

Complainant initially argued that online complaints should be sufficient to establish that 

Respondent’s conduct was a pattern or practice. Respondent’s refusal to fully participate in 

discovery made establishing this claim more challenging for Complainant, particularly as one of 

the few discovery questions she answered was a denial that prior section 41102(c) claims had 

been filed against The Right Move. In addition, Complainant is aware that the Commission’s 

standard for evaluating section 41102(c) complaints recently changed and that the question of 

what evidence would be sufficient is developing. Complainant’s decision to withdraw his section 

41102(c) complaint is reasonable and will be granted.

In the supplemental motion to amend the complaint, the Complainant requests a change 

to the Respondent’s name in the Complaint. 

The Respondent to date has not used her legal name in the Complaint 

proceedings. The Respondent’s legal name is “Michal Franklin,” whereas 

“Michelle Franklin” is a closely spelled alias. Therefore, the Complainant hereby 

requests that the Respondent’s name be revised in the Complaint to reflect 

“Michal Franklin A.K.A Michelle Franklin D.B.A The Right Move, Inc.” 

Supplemental Motion to Amend at 1. Respondent did not object to the motion to amend. 

According to the New York State Department of State, Division of Corporations, Entity 

Information, The Right Move, Inc’s chief executive officer is “Michal Franklin” and the filing 

date is listed as Jan. 06, 2011, consistent with her FMC license, obtained in 2011.

https://appext20.dos.ny.gov/corp_public/CORPSEARCH.ENTITY_SEARCH_ENTRY. 

Michelle Franklin also uses the first name Micah in some of the documents in the file. 

Respondent’s Answer to Complainant’s Discovery Request (titled Motion to Compel) at 2. It 

appears that the different spellings all refer to the same individual and Respondent did not 

contest that she uses a different spelling of her name. Accordingly, this decision applies to 

Respondent, who also spells her first name as Michal and Micah. 

Complainant’s motion to amend the complaint and supplemental motion to amend the 

complaint are hereby GRANTED. 

 72 2 F.M.C.2d 2 F.M.C.2d
D. Evidence

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 initial decision is 

based on the pleadings, exhibits, briefs, proposed findings of fact and replies thereto, and 

appendices 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 

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, 193-194 (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. 

The parties were advised that “OALJ issues decisions based only on the record in the 

proceeding. See 5 U.S.C. § 556(e). If there is information available in a different office at the 

Commission that a party wants considered, it is the party’s obligation to provide that information.” 

Order Denying Complainant’s Motion for Finding of Facts and Default Decision at 3.

In addition, as previously explained to the parties: 

Settlement discussions are not admissible under Federal Rule of Evidence 408. 

This is, in part, because often in a settlement neither side obtains or pays what 

they believe is the correct amount. Settlements are compromises and external 

factors such as the likelihood of recovery, risk of an adverse ruling, and costs of 

continued litigation impact settlement offers. These are not the factors that a judge 

considers in ruling on the merits of the claim. Therefore, settlement offers are not 

accurate measures of the value of a case and are generally not admissible. To the 

extent that settlement offers or actions have been mentioned in filings, those 

comments are stricken and not considered.

Order Denying Complainant’s Motion for Finding of Facts and Default Decision at 2-3. 

E. Arguments of the Parties

“Complainant contends that the evidence of record . . . establishes that Respondent 

knowingly and willfully by means of an unfair device obtained ocean transportation of property 

at less than the rates or charges that would otherwise [be] applicable.” Complainant Brief at 1.

Respondent admits that she failed to pay the ocean transportation costs and states that she 

“took full responsibility” but claims that it was the Complainant’s “lack of knowledge that 

created unnecessary issues time after time.” Respondent Brief at 3-4. 

 73 2 F.M.C.2d 2 F.M.C.2d
Specific findings of fact are set out in part two, analysis and conclusions of law in part 

three, and the order in part four.

II. FINDINGS OF FACT

1. Complainant, Muhammad Rana, is an individual shipper who was temporarily relocating 

his residence from Alexandria, Virginia, to Islamabad, Pakistan. CPFF 1. 

2. Respondent Michelle Franklin is the sole owner of The Right Move, Inc. Respondent’s 

Response to Complainant’s Motion of January 23, 2020 (titled Motion for Finding of facts 

alleged by the complainant and default decision- Response) at 3 (“As a sole owner of a 

closed failed company , I also bare the debt of it .”) 2

3. During this shipment, The Right Move had no other employees. Respondent’s Answer to 

Complainant’s Discovery Request (titled Motion to Compel) at 1. 

4. The Right Move was licensed by the Commission as an NVOCC (License No. 023229N) 

in 2011. Respondent’s Answer to Complainant’s Discovery Request (titled Motion to 

Compel) at 1; C. App. Ex. 37. 

5. Respondent’s NVOCC license was revoked by the Commission on July 4, 2019, for failure 

to maintain a valid bond. C. App. Ex. 37. 

6. On February 4, 2019, Respondent provided Complainant a quote for door to port service 

with self-loading for a total price of $2,595.00. CPFF 2; RPFF 1. 

7. On February 6, 2019, Complainant sent Respondent an email accepting the terms and 

conditions and promising full payment by February 14, 2019. C. App. Ex. 2. 

8. Respondent provided Complainant a document titled “The Right Move Inc. ALL 

AROUND THE WORLD International Moving Service Agreement,” (“Shipping 

Agreement”) which Complainant signed and dated February 6, 2019. C. App. Ex. 1. 

9. The Shipping Agreement listed the service to be provided as a door to port movement by 

20 ft container from Complainant’s residence in Alexandria, VA, on February 14, 2019, to 

the port in Karachi, Pakistan, for $2,500, with free total loss insurance coverage of $5,000 

plus $95 documentation fee, totaling $2,595.00. C. App. Ex. 1. 

10. According to the Shipping Agreement, the flat rate included shipping or ocean freight 

charges from Alexandria, Virginia, to Port Qasim, Karachi, Pakistan. The flat rate also 

included terminal handling or port of loading charges at origin. C. App. Ex. 1. 

2 Irregular spacing, punctuation, and spelling are maintained in quotes where possible throughout 

the decision.

 74 2 F.M.C.2d 2 F.M.C.2d
11. The Shipping Agreement listed the transportation provider as: Right Move Inc., 150 Motor 

Parkway Suite # 401, Hauppauge, NY 11788; Registration: FMC # 023229N; and 

Customer Rep: Michelle. C. App. Ex. 1. 

12. On February 7, 2019, Respondent sent Complainant an email stating that “your container 

is booked,” identifying the carrier (Maersk), vessel name, voyage number, and indicating 

that “We are all set for Feb 14 at 11 AM.” R. App. Ex. 9. 

13. On February 14, 2019, Complainant wire transferred $2595.00 into Respondent’s account 

under the name Michelle Franklin. C. App. Ex. 3. 

14. On February 15, 2019, Respondent acknowledged receipt of the wire in an email. C. App. 

Ex. 4.

15. On February 15, 2019, Complainant loaded the container. RPFF 6. 

16. The Right Move Bill of Lading, dated February 27, 2019, listed Complainant as the 

exporter/shipper and consignee; Right Move as the forwarding agent; CP World Co. Ltd. 

(Karachi) as the destination agent; port of loading as Baltimore; port of unloading as Port 

Qasim, Pakistan; and the container number as MSKU277849-7 “Said to contain 48 items 

of used household goods and used personal effect. Ocean Freight prepaid, Express release”

and was signed by “THE RIGHT MOVE, INC., As Carrier.” C. App. Ex. 7. 

17. The Troy Container Line (“Troy”) bill of lading dated February 27, 2019, listed 

Complainant as the shipper/exporter, consignee, and notify party; Right Move as the 

forwarding agent; CP World Co. Ltd (Karachi) as the destination agent; port of loading as 

Baltimore; port of discharge as Port Qasim, Pakistan; the description of packages and 

goods as 20 ft container with 72 pieces of used household goods and personal effects and 

the container number as MSKU277849-7. C. App. Ex. 6. 

18. Maersk was the vessel operating common carrier that transported Complainant’s container 

from Baltimore to Qasim Port in Karachi, Pakistan. C. App. Ex. 7, 18-20. 

19. In an email dated March 13, 2019, the Respondent informed the Complainant that the 

“shipment is due in Karachi by April 3.” C. App. Ex. 38. 

20. On March 25, 2019, Respondent sent Complainant an email requesting an inventory list, 

final address, and local phone number for the bill of lading and stating that “All these 

details must be on the bill of lading, or it will cause problems for you when the shipment 

arrives” and indicating that “changing the docs will cost a fee, I am not charging anything, 

it is the steamship line.” R. App. Ex. 4. 

21. On March 25, 2019, Complainant responded by asking Respondent to “explain what you 

meant by ‘changing the bill of lading at this time will cost a fee.’” R. App. Ex. 4. 

22. On March 30, 2019, Complainant sent an email to Respondent asking “Is the bill of ladding 

ready?” and then sent another email asking how much free time he would have. C. App. 

Ex. 16; R. App. Ex. 5. 

 75 2 F.M.C.2d 2 F.M.C.2d
23. The shipment arrived in Karachi, Pakistan, on March 31, 2019. C. App. Ex. 39. 

24. Complainant did not receive a copy of the bill of lading until after the shipment arrived. C. 

App. Ex. 5, 16, 17. 

25. On March 31, 2019, Complainant emailed Respondent saying he needed the Bill of Lading 

“ASAP.” C. App. Ex. 15; R. App. Ex. 5. 

26. On April 1, 2019, Complainant again emailed Respondent stating “I need the bill of ladding 

today. I am leaving for Karachi tomorrow morning, the cargo is arriving day after 

tomorrow. Please send the bill of ladding.” C. App. Ex. 15; R. App. Ex. 5. 

27. Later on April 1, 2019, Complainant emailed Respondent again, stating: “It appears you 

are ignoring my requests. If I don’t receive my bill of lading timely, I will in a civil court 

seek damages and costs incurred by me as a consequence of your company’s failure to 

issue a timely bill of lading . . . . To avoid litigation please send me my bill of lading.” 

R. App. Ex. 5. 

28. On April 2, 2019, Respondent sent an email to Complainant stating: 

Sorry, I didn’t mean to be silent, I didn’t have proper access to the e-mail , 

I regret to inform you that our company was target to shipping fraud, and as 

result, we are forced to shut down as it put a huge financial burden on us . 

Please see the old Bill of lading, I am waiting for them to revise it, but it 

always takes few days, and because the shipment arrived, they may not be 

able to do so . You may have to change it from your end, Please send me 

your agent details, I would need to make sure he can help you ! I can issue 

a house bill of lading , if that helps with the proper info , Just let me know 

what your agent wants to do ? 

C. App. Ex. 17.3

29. On April 2, 2019, Complainant emailed Respondent saying “Sorry to hear about your 

company troubles. I hope things work out for the best. My agent wants to know if I have 

any ‘free time’? How many days can they keep my cargo without charge?” Respondent’s 

email response filed October 1, 2019, Ex. 3. 

30. On April 2, 2019, Complainant traveled to Karachi, Pakistan, from Islamabad, Pakistan, to 

receive his cargo from Port Qasim, Karachi. The same day, he went to Maersk’s shipping 

office in Karachi to check the status of the shipment and found out that the shipment had 

arrived at port. He also found out that Troy’s delivery agent in Pakistan, CP World, had 

placed a hold on the cargo because ocean freight/shipping charges had not been paid by 

Respondent. He explained to the Maersk office that ocean freight was prepaid, but 

3 Paragraph structure in quotes is not maintained throughout this decision.

 76 2 F.M.C.2d 2 F.M.C.2d
Maersk’s representative asked to see an endorsement from CP World. C. App. Ex. 41 

(Affidavit).

31. From April 3, 2019, onwards Complainant was repeatedly informed verbally by Troy’s 

delivery agent that Respondent did not pay ocean freight shipping dues for his cargo and 

as a result, the cargo could not be released until full payment was received from 

Respondent. At first, Complainant did not believe the CP World representative and thought 

that the representative was extorting money from Complainant because he was a United 

States citizen. C. App. Ex. 41 (Affidavit). 

32. On April 4, 2019, Respondent emailed Complainant and stated “Changes to the bill of 

lading will take a few days, ask your agent if a house bill of lading will help ? I can send 

that right away at no cost.” R. App. Ex. 6. 

33. On April 5, 2019, Complainant sent Respondent a series of emails. The first one stated:

TROY Container Line has placed a hold on my cargo stating that you have 

not paid them for the shipping and cargo service. They are also saying that 

you have engaged in “shipping fraud.” Until you pay them, MAERSK will 

not [release] my cargo. Can you please send me a receipt or proof of 

payment by you to TROY or the third party so I can have MAERSK lift the 

hold on my cargo? After tomorrow they will start charging me $55 per day 

for storage. Please assist.

C. App. Ex. 18. 

34. Also on April 5, 2019, Complainant sent an email to Respondent stating that “Maersk is 

asking for payment of delivery and shipping. I already paid you for that, can you please 

check with them” and an email stating “Please contact MAERSK and let them know that 

shipping and delivery expenses have been prepaid” and providing his agent’s email 

address. C. App. Ex. 19. 

35. On April 5, 2019, Respondent emailed Complainant stating “Troy said I am engaged in a 

shipping fraud ? Can you please send me that ? Also, as I have advised there was another 

company involved, I am checking to see why they didn’t pay.” C. App. Ex. 21. 

36. On April 5, 2019, Complainant then sent an email stating:

Yes, TROY’s agent CP World who put a hold [] on the cargo on the 

direction / behalf of TROY stated that you have engaged in “shipping 

fraud.” Tomorrow morning he will issue a letter in writing that I can forward 

to you. Also one of the BL you gave me is from TROY. Can you please 

check or get a receipt or proof of payment to TROY and send it to me so I 

can receive my cargo?

C. App. Ex. 22. 

37. On April 5, 2019, Respondent sent an email stating:

 77 2 F.M.C.2d 2 F.M.C.2d
The Right Move is closing, but we are far from engaged in Shipping fraud. 

It’s actually the opposite, maybe that’s what they meant, but regardless, We 

have paid the shipping costs to a third party to pay the SSL for this shipment, 

I am checking into it, to see how we can help you release the shipment, 

Because the company is closed, I am unable to pay it again, and if it comes 

down to the fact that you may have to pay it directly, We are fully licensed 

and insured, and you can file a claim against the company bond ! If you 

need to pay , I will send you the details of how to file a claim and retrieve 

your money ! But for now, give me an hour or 2 to see why this was not 

paid, even though we have sent the payment. 

C. App. Ex. 23. 

38. On April 5, 2019, Complainant sent Respondent an email stating “If you sent the payment, 

can you please send me proof that you sent the payment, so I can get my cargo released.” 

C. App. Ex. 23. 

39. On April 5, 2019, Respondent sent an email to Complainant stating: 

I paid the fees you have to believe me, I talked to the company and they are 

sending the payment today, but it may take a few days, I think it [will] be 

released by Tuesday or Wednesday the latest, If you don’t want to wait, pay 

the fees, and I will wire the money to you I will need your bank details to 

do so ! 

C. App. Ex. 24. 

40. On April 5, 2019, Complainant sent Respondent an email stating:

Despite everyone telling me that I have been defrauded, I believe you, I 

always try to see good in people. 

Michelle, I do not want to wait, because after tomorrow I will be charged 

$55 per day for storage. I just want what I paid for, which is my right. Please 

wire the money to my account today / ASAP otherwise I will be compelled 

to lodge a complaint with the Federal Trade Commission and FBI’s online 

/ email fraud division. TROY will issue a letter to me tomorrow implicating 

you in shipping fraud. In addition when I am back stateside in a couple of 

months I will file a claim in a civil court where I will claim damages, 

expenses, travel / lodge expenses and mental anguish etc. 

To avoid all of this please wire the total amount that was due for shipping 

to my account today, so I can pay it here. 

C. App. Ex. 25. The email included Complainant’s bank and account number.

41. On April 8, 2019, Respondent sent Complainant an email stating:

 78 2 F.M.C.2d 2 F.M.C.2d
I had every intention of helping you , I really did ! But it seems that you get 

the wrong advice [from] the wrong people , and I am afraid that this leaves 

me no choice but to refuse to communicate with you directly ! From now 

on we either talk through the FMC , or your lawyer ! I will not respond to 

any of your e-mails if you keep coming up with your redicules accusations! 

Please e-mail the Federal Maritime commission and they will assist both of 

us ! 

R. App. Ex. 3 (also includes the personal email address of an FMC employee in the 

Commission’s Office of Consumer Affairs and Dispute Resolution Service).

42. On April 8, 2019, Complainant sent Respondent an email stating:

I am the victim here. I did not deserve this, what you did to me is very 

wrong. I am stuck in a city where I don’t know people, I am paying for 

lodging, my cargo is not being released because you did not pay TROY their 

dues from the money that I paid you. I kept my end of bargain, but you 

failed to keep yours. I have all emails and proof of what we agreed upon 

and what I paid you. You did not deliver the service you agreed to provide.

I am not the one saying you engaged in shipping fraud, it is TROY and CP 

World who are claiming this and giving me evidence. And yes I am the 

victim here.

I am not threatening, I am asking you to provide me with evidence that you 

paid TROY, so I can contest their claim here and receive my cargo.

Alternatively you can wire me money to my account, so I dont have to go 

to court, FMC or FTC. So yes lets resolve this in a civil manner and in good 

faith. So please either call TROY or CP World and tell them to release my 

cargo, or give me proof of payment to TROY, so I can contest their claim 

here without paying. Or just simply wire the money to my bank account. 

C. App. Ex. 26 (including Complainant’s bank account information). 

43. On April 9, 2019, Respondent sent Complainant an email stating:

Of course I am in touch with them , I have been following up on your 

shipment the whole time, just didn’t know Troy didn’t get paid. The 

booking was done under another company license, because I knew we may 

get to the point we have to close, We conducted business with a company 

who shipped donation goods . . . . The person who booked it disappeared 

and left us with six containers in the port or destination. Needless to say that

as you know , port charges accumulate every day , and we were trying to 

find a solution, eventually we ended up abandoning the shipments, and 

needed to pay high penalties, which forced us to close. 

 79 2 F.M.C.2d 2 F.M.C.2d
Since I didn’t want your shipment to be effected in this process, I opened a 

bank account that was a business account, but had my name on it in order 

to be not associated it with the The Right Move, Inc financial burden,

Once I received your payment, I paid it to the third party I used to book your 

shipment from the same bank account, because once again, I didn’t want 

your shipment to get stuck if in case the Right Move Inc license is being 

revoked while in the process of shipping your goods. 

Needless to say that at the time I took your shipment, It was all in good faith

that the company will continue to operate and move forward, and this will 

not effect you. 

The third company I booked it with , paid for the trucker costs, and waited 

until the last minute to pay the ocean, we all do that, but it is after the fact 

your shipment arrived because according to the booking , the shipment 

should have been there in few days so they thought they had few more days.

I get that you [are] upset and frustrated, I too, worked very hard for past 10 

years, and one bad customer crashed it all down ! This is life, you learn from 

it and move on ... I will help you finish this , but I still think you should pay 

directly and let me refund you ! it will be faster, easier and cheaper.

C. App. Ex. 27. 

44. On April 9, 2019, Respondent sent Complainant an email stating “Please let me know if 

you have paid the ocean directly ? The company I paid the money to, needs to know if to 

refund me, so I can refund you , or should they pay the ocean directly ?” C. App. Ex. 28. 

45. On April 9, 2019, Complainant sent Respondent an email stating “I have not paid them yet. 

How soon can that company pay TROY? Please ask and let me know.” C. App. Ex. 29. 

46. On April 9, 2019, Respondent sent Complainant an email stating “They promised to pay it 

today or tomorrow, but since you are paying $50 a day , I strongly suggest you pay directly 

and I will refund you , probably no [later] than Friday.” C. App. Ex. 30. 

47. On April 9, 2019, Complainant sent Respondent an email stating “Please tell them to pay 

today ASAP, it is evening here so it should clear by tomorrow. Please send me proof of 

payment (email or receipt etc) so I can show CP World.” C. App. Ex. 31. 

48. On April 9, 2019, Respondent sent Complainant an email stating “I have been asking them 

to pay it for the last 4 days, they should be able to pay it today or tomorrow. I will send 

you the proof once it was paid.” C. App. Ex. 32. 

49. In a letter to Complainant bearing a CP World Co. letterhead dated April 9, 2019, CP World 

stated:

 80 2 F.M.C.2d 2 F.M.C.2d
We hereby inform that we are the active agent of M/S Troy Container Lines 

in Pakistan. We have been instructed by Troy Container Lines to Hold said 

Shipment till our Further Instruction due to reason that Forwarding Agent, 

THE RIGHT MOVE INC (Michelle Franklin) of this Consignment has not 

paid Port of Loading and Shipping Dues. Meantime they also instructed if 

Consignee willing to pay POL and Shipping Dues than we are free to 

Release the Delivery of Goods at here in Karachi. I hope this clarifies our 

position & fully explains why your cargo is not being released at PORT 

QASIM.

Yours faithfully

For: CP World CO.

AS Handling Agents 

C. App. Ex.8. 

50. On April 9, 2019, Complainant, for the first time, agreed to pay ocean and shipping that 

was owed by the Respondent, only after Troy’s agent CP World officially and in writing 

gave him the option to pay in order to release his cargo. C. App. Ex. 40 (Affidavit). 

51. On April 9, 2019, Complainant sent Respondent an email stating “Okay Michelle, I will 

pay directly tomorrow and you can send me the refund by Friday. CP world will charge 

me 156,750 rupees in unpaid dues, this comes out to 1,112.00 US dollars. This excludes 

port costs and other delivery costs. I will send you the receipt. You can mail a cashier’s 

check in my name to my brother’s address in Connecticut.” Respondent’s email response

filed October 1, 2019, Ex. 6. 

52. On April 9, 2019, Respondent sent Complainant an email stating “The Invoice and payment 

amount I made was $1025[.] That’s what they needs to pay to Troy[.] On Friday you said 

you will pay it directly, to avoid these additional costs. I will keep following up with them 

and make sure they pay , but it may take another day , and in the meantime you are paying 

additional fees. I paid these fees a day after you submitted your payment to me, just so you 

know !” Respondent’s email response filed October 1, 2019, Ex. 5. 

53. On April 9, 2019, Complainant paid CP World “with mental reservation and under duress 

just to get my important documents (birth certificate, citizenship documents, bank 

documents, tax returns, ownership documents, college degrees, employment documents, 

awards, etc.) and personal belongings of sentimental value (photos, letters, etc.) released.” 

C. App. Ex. 40 (Affidavit). 

54. On April 10, 2019, the Complainant paid CP World 157,000 Pakistani Rupees for shipping 

charges. C. App. Ex. 9; C. App. Ex. 41 (Affidavit). 

55. On April 10, 2019, after payment to CP World, Complainant received a charge calculation 

breakdown showing that the 7-day free time had ended and requiring an additional $605.00 

 81 2 F.M.C.2d 2 F.M.C.2d
in container detention charges beyond the regular 7-day free time at a standard rate of 

$55.00 per day. C. App. Ex. 10. 

56. On April 10, 2019, Respondent sent Complainant and email stating, “Perfect, I am also 

confirming that the money was sent back to me, and I should be able to pay by Friday ! I 

[will] check how many free days we have , will get back to you shortly !” C. App. Ex. 33. 

57. Complainant had brought dollars in cash with him for the customs duty, truck rental, and 

port charges, but had to use it to pay CP World, after which the Complainant was out of 

cash and didn’t have money for the container demurrage charges. After this, because the 

Complainant did not have a bank account in Pakistan; he depended on wire transfers and 

remittances from his US bank account, which can take from 2 to 3 business days. Plus, all 

banks and ocean freight shipping related offices were closed over the weekend in Pakistan. 

Furthermore, Maersk Shipping Company and shipping agents in Pakistan do not accept 

credit cards. C. App. Ex. 41 (Affidavit). 

58. On April 15, 2019, after the weekend and after receiving additional cash, the Complainant 

paid Maersk’s shipping office in Karachi 85,000 rupees for the container demurrage 

charges through a shipping agent. C. App. Ex. 41 (Affidavit). 

59. After the payment was made Complainant’s cargo was released for customs inspection at 

Port Qasim. Complaint at 3; C. App. Ex. 41 (Affidavit). 

60. On April 15, 2019, Respondent sent Complainant an email stating “Hope you are well, Did 

you release the container ? Also can you please send me the agent invoice ?” R. App. Ex. 

7. 

61. On April 16, 2019, through April 19, 2019, the Complainant’s cargo underwent the routine 

procedural customs inspection, requirements, and paperwork. C. App. Ex. 41 (Affidavit). 

62. On April 17, 2019, the Respondent stated, “I will send you a refund shortly I will also 

check that [Troy’s] agent only charges what he needed, but that’s between them and our 

company. Also, did you at least get the container ?” C. App. Ex. 34. 

63. On April 19, 2019, the Respondent stated that “The payment will be concluded in a day or 

2, of course I will try to pay you as much as I am responsible for ! Just wanted to double 

check all the costs you had paid, and with the holiday in the middle it may take until 

Tuesday ! I promise we will finish this very very soon !” C. App. Ex. 35. 

64. On April 20, 2019, after receiving clearance from Pakistan’s Customs Department, the 

cargo was not allowed to leave Port Qasim because the ‘No Objection Certificate (NOC)’ 

that was previously issued by Troy’s agent CP World had expired. The Port Qasim 

Authority required the renewal of the No Objection Certificate from CP World. Complaint 

at 4; C. App. Ex. 41 (Affidavit). 

65. On Monday, April 22, 2019, when the CP World offices opened after the weekend, the 

NOC was renewed. During this time, an additional 6 days of container charges (demurrage 

 82 2 F.M.C.2d 2 F.M.C.2d
and detention) for the Maersk container had accumulated. Complaint at 4; C. App. Ex. 41 

(Affidavit).

66. On April 22, 2019, Complainant paid an additional 47,536 rupees to Maersk for container 

demurrage charges through a shipping agent. C. App. Ex. 12, 13, 41 (Affidavit).

67. On April 23, 2019, Complainant’s cargo left Port Qasim, Karachi, for Islamabad. C. App. 

Ex. 41 (Affidavit). 

68. On April 23, 2019, Complainant had to pay 385,000 rupees (PKR) for lodging at a local 

hotel for 21 nights in Karachi. This was for the duration of time the Respondent had to 

spend in Karachi while his cargo was held at Port Qasim, Karachi. C. App. Ex. 14, 41 

(Affidavit). 

69. On May 1, 2019, Respondent sent an email to Complainant stating “Still fighting the 

Steamship line to get you more free days, as they usually don’t grant it after the container 

arrives. Did you release the shipment ? I was waiting to see what is the total amount and to 

see if I can help you a little with the additional costs you had occurred.” R. App. Ex. 8. 

70. On May 30, 2019, after this proceeding was filed but before Respondent filed a response 

with the Commission, Respondent sent an email to Complainant stating:

A wire for $1025 was initiated yesterday. You should have the payment by

tomorrow in the bank account you have provided. The amount is the ocean 

cost that we failed to pay in time. You can take all the legal actions you 

want. The company is closed ! It was closing down and money was tight 

and therefore the delay ! I had intentions of paying you back all alone , but 

you were too busy making this something it was not ! I do apologize for the 

inconvenience and wish you all the best ! 

C. App. Ex. 36. 

71. Respondent admitted that “the Ocean freight was not paid. That is agreeable” in her 

response to Complainant’s discovery. Respondent’s Response to Complainant’s 

Discovery. 

72. Respondent acknowledged that her company’s financial problems stemmed from problems 

with prior shipments. C. App. Ex. 27 (describing an abandoned shipment); RPFF at 2 (“I 

was informed that the freight was on hold, and It seems as the payment that was submitted 

was applied towards an old shipment that was still pending.”); Respondent’s email 

response (to order to show cause) at 3. 

73. In Respondent’s response to the Complaint, the Respondent claimed that “Mr. Rana was 

one of the last few customers we had to finish before we chose to close the company and 

surrender our FMC license.” Answer at 3.

 83 2 F.M.C.2d 2 F.M.C.2d
74. On June 10, 2019, and July 9, 2019, Respondent emailed the FMC stating that her business 

was in the process of closing. R. App. Ex. 1, 2. Respondent did not include the emails from 

the FMC about her license in the record.

75. According to the Commission website, in a list of OTI’s with licenses revoked or 

surrendered, the Respondent’s license is listed as revoked on July 4, 2019, while this case 

was pending, because of failure to maintain a valid bond. C. App. Ex. 37; 

https://www.fmc.gov/oti/revocations-july-12-2019. 

76. Respondent stated that the “Complainant is entitle[d] to ocean costs refund + Demurrage 

of 5 days caused by the delay of releasing the ocean, nothing else if related what so ever to 

his additional expenses nor should affect the outcome of this case.” Respondent’s Response 

to Complainant’s Motion of January 23, 2020 (titled Motion for Finding of facts alleged 

by the complainant and default decision- Response) at 4. 

77. Complainant paid the port fees out of pocket and is not asking for the port fees in this 

complaint. There is no evidence that the Complainant asked for demurrage before this 

complaint and the Respondent did not offer to pay some of the demurrage prior to 

settlement discussion in November 2019. C. App. Ex. 40 (Affidavit). 

78. From February 2019 to date, Michelle Franklin has been and still is the sole spokesperson, 

representative, owner, advocate, and employee of The Right Move. Respondent’s failure 

to respond to Complainant’s discovery: Request for the Production of Documents 10 

through 15. 

79. The Right Move has failed to observe corporate formalities in terms of documentation. 

Respondent’s failure to respond to Complainant’s discovery: Request for the Production 

of Documents 10 through 15. 

80. The Right Move is not a separate entity from Michelle Franklin, and The Right Move is or 

was taxed through Michelle Franklin’s personal tax returns. Respondent’s failure to 

respond to Complainant’s discovery: Request for the Production of Documents 13 through 

15. 

81. Michelle Franklin treated the funds and assets of the Right Move as her own. C. App. Ex. 3 

(shipping charges for Complainant’s container were paid into Michelle Franklin’s personal 

account); Respondent’s failure to respond to Complainant’s discovery: Request for the 

Production of Documents 13 through 15. 

82. The Right Move was being used by Michelle Franklin as a façade for her personal financial 

dealings and not as a separate corporate entity. C. App. Ex. 3. Respondent’s failure to 

respond to Complainant’s discovery: Request for the Production of Documents 10 through 

15. 

83. Complainant paid an additional $55.00 per day container demurrage / detention charge for 

17 days (April 7th through April 23rd), a total of $935.00 (132,536.00 rupees); this was 

beyond the 7-day free time, because of the delay caused by Respondent’s failure to pay 

 84 2 F.M.C.2d 2 F.M.C.2d
ocean freight. C. App. Ex. 10, 11, 12, 13, 41 (Affidavit); https://www.maersk.com/en/localinformation/pakistan/import.

84. Complainant had intended to stay in Karachi for only 3 nights for the customs clearance 

process. However, due to Respondent’s failure to pay the shipping fees, Complainant had 

to stay at a hotel in Karachi for an additional 18 nights and pay a total of 388,500 rupees 

in hotel lodging at a rate of 18,500 rupees per night. For the additional 18 nights lodging 

the total comes out to 333,000 rupees or $2,350.03. C. App. Ex. 14, 41 (Affidavit).

85. Complainant paid taxi charges in the amount of about $7.76 (1100 rupees) per day or 

$116.40 for 15 days to get to and from the Maersk Office, CP World Office, Western 

Union, Port Qasim, hotel, etc. C. App. Ex. 41 (Affidavit). 

86. Complainant stayed at a hotel in Karachi for an additional 18 days resulting in meals and 

incidental expenses (M&IE) incurred by Complainant. C. App. Ex. 41(Affidavit). 

According to the U.S State Department the foreign per diem M&IE rate set for Karachi in 

April 2019 was $82 per day. The total M&IE comes out to 18 x $82 = $1,476.00. 

https://aoprals.state.gov/Web920/per_diem_action.asp?MenuHide=1&CountryCode=116

6&PostCode=&PublicationDate=20190401. 

87. In April 2019, the price of the dollar in the open market against the rupee fluctuated 

between 141 to 142 rupees per dollar. Therefore, the exchange rate used in this calculation 

is 141.70 rupees per dollar, which was also the rate used by Maersk shipping company. C. 

App. Ex. 41 (Affidavit). 

III. ANALYSIS AND CONCLUSIONS OF LAW

A. Burden of Proof

To prevail in a proceeding brought to enforce the Shipping Act, a complainant has the 

burden of proving by a preponderance of the evidence that the respondents violated the Act. 

5 U.S.C. § 556(d) (“Except as otherwise provided by statute, the proponent of a rule or order has 

the burden of proof.”); 46 C.F.R. § 502.203; Exclusive Tug Franchises, 29 S.R.R. 718, 718-719 

(ALJ 2001). “[A]s of 1946 the ordinary meaning of burden of proof was burden of persuasion, 

and we understand the APA’s unadorned reference to ‘burden of proof’ to refer to the burden of 

persuasion.” Director, Office of Workers’ Comp. Programs v. Greenwich Collieries, 512 U.S. 

267, 276 (1994). The party with the burden of persuasion must prove its case by a preponderance 

of the evidence. Steadman v. SEC, 450 U.S. 91, 102 (1981). “[W]hen the evidence is evenly 

balanced, the [party with the burden of persuasion] must lose.” Greenwich Collieries, 512 U.S. at 

281. 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 S.S. Corp. v. General Foundries Inc., 26 S.R.R. 1173, 

1180 (ALJ 1993), adopted in relevant part, 26 S.R.R. 1424 (FMC 1994). 

B. Discovery Sanctions

The order denying Complainant’s motion for finding of facts and default decision states:

 85 2 F.M.C.2d 2 F.M.C.2d
Respondent refuses to answer questions that she believes are not relevant thereby 

denying Complainant discovery that is relevant and necessary to pursue his claim. 

Of Complainant’s 17 document requests, it does not appear that Respondent 

provided any documents. She did respond to two of the requests, indicating that 

no documents exist for document request 12 (“No partnership agreements 

available”) and document request 16 (“None exist” regarding whether there are 

any complaints, lawsuits, litigation or civil actions against Respondents where a 

violation of section 41102(c) was alleged.”). For the interrogatories, Complainant 

responded to only three of the thirteen questions, including interrogatories 1 (who 

answered), 12 (amount of bond), and 13 (a partial answer to why the OTI bond 

was revoked).

Order Denying Complainant’s Motion for Finding of Facts and Default Decision at 1. In addition, 

the order found that “[i]t is therefore appropriate to find that Respondent’s failure to provide 

documents and answer interrogatories leads to an inference that those responses would have been 

adverse to her interests. It is noted, in addition, that Respondent repeatedly admits her failure to 

pay the ocean freight although she denies that there are any other Shipping Act violations.” Order 

Denying Complainant’s Motion for Finding of Facts and Default Decision at 2. 

The discovery requests submitted by Complainant to Respondent on September 18, 2019, 

included requests for information about this shipment such as communication with any third 

party involved, specifically any third party used to make a payment to Troy; proof of payment 

for the shipping, delivery, and transportation of this cargo; the amount of the OTI surety bond at 

the time of the shipment and the reason the bond was revoked; business documents including 

article of incorporation, business license, recent tax returns, stock certificates, operating 

agreements; and all documents related to complaint, lawsuits, litigation, and civil actions against 

the Respondent personally or The Right Move business where a violation of 46 U.S. Code 

§ 41102(c) was alleged. Motion for Finding of Facts Alleged by the Complainant and Default 

Decision, Ex. 2. This discovery request was reasonable and relevant to the issues in this 

proceeding. Respondent’s refusal to provide the information despite repeated requests and an 

order from the undersigned prevented the discovery of relevant evidence and justified an 

inference that the responses would have been adverse to Respondent’s interests.

Complainant’s complaint was notarized and under oath. All of Complainant’s pleadings 

have been signed and certified. Additionally, Complainant submitted a sworn notarized 

statement with his proposed findings of facts and brief. Complainant requested that Respondent 

answer the interrogatories under oath and under penalty of perjury; however, none of the 

Respondent’s responses were under oath or under penalty of perjury. The Respondent has not 

signed her pleadings under oath or under penalty of perjury. This fails to comply with the 

Commission’s requirement that pleadings, documents, or other papers filed with the Commission 

be signed and verified under oath and undermines the credibility of Respondent’s statements and 

assertions. 46 C.F.R. §§ 502.6, 502.62(b). 

 86 2 F.M.C.2d 2 F.M.C.2d
C. Discussion

1. Legal Standards

The Shipping Act provides that a “person may file with the Federal Maritime 

Commission a sworn complaint alleging a violation of this part . . . . If the complaint is filed 

within 3 years after the claim accrues, the complainant may seek reparations for an actual injury 

to the complainant caused by the violation.” 46 U.S.C. § 41301(a). 

Complainant alleges that Respondent violated section 41102(a) of the Shipping Act, 

which states:

Obtaining Transportation at Less Than Applicable Rates.—A person may not 

knowingly and willfully, directly or indirectly, by means of false billing, false 

classification, false weighing, false report of weight, false measurement, or any 

other unjust or unfair device or means, obtain or attempt to obtain ocean 

transportation for property at less than the rates or charges that would otherwise 

apply. 

46 U.S.C. § 41102(a) (formerly section 10(a)(1)). 

Section 41102(a) is also similar to section 16 of the Shipping Act, 1916, the predecessor 

to the 1984 Act. Section 16 stated:

That it shall be unlawful for any shipper, consignor, consignee, forwarder, broker, 

or other person, or any officer, agent, or employee thereof, knowingly and 

willfully, directly or indirectly, by means of false billing, false classification, false 

weighing, false report of weight, or by any other unjust or unfair device or means 

to obtain or attempt to obtain transportation by water for property at less than the 

rates or charges which would otherwise be applicable. 

46 U.S.C. § 815 (1982). 

In Capitol Transportation, Inc., the First Circuit reviewed the Commission’s imposition 

of a reparation award based on a violation of section 16. Capitol Transportation, Inc. v. United 

States, 612 F.2d 1312 (1st Cir. 1979). Maritime Service Corporation (“MSC”), a central 

collection agency for the billing and collection of container demurrage charges owed to ocean 

carriers, billed Capitol for demurrage charges under commercial bills of lading naming Capitol 

as consignee, but Capitol did not pay. MSC filed a complaint with the Commission seeking a 

reparation award for the amount owed. The Commission found that Capitol operated as an 

NVOCC and as consignee on the shipments and was liable for the demurrage charges. The 

Commission affirmed the administrative law judge’s holding that “by knowingly and willfully 

refusing to pay demurrage owing under published tariffs, [Capitol] in effect obtained 

transportation by water at less than the applicable rates and thus violated section 16 of the 

Shipping Act.” Capitol Transportation, 612 F.2d at 1317. 

Capitol filed a petition with the Court of Appeals for the First Circuit for review of the 

Commission’s decision. The court denied Capitol’s petition for review. Regarding section 16, the 

 87 2 F.M.C.2d 2 F.M.C.2d
court stated that “a carrier’s mere stubborn but good faith refusal to pay a disputed rate or 

charge” does not constitute an “unjust or unfair device or means” within the meaning of section 

16 but that a refusal to pay accompanied by an “element of fraud or concealment” would suffice 

to show an “unjust or unfair device or means.” 612 F.2d at 1323. The court agreed with the 

Commission’s finding that the “requisite element of fraud or concealment was established in this 

case by Capitol’s ‘unexplained and apparently unjustified avoidance of any payment of the 

amounts found due and owing.’” Capitol Transportation, 612 F.2d at 1323. 

The Commission could properly find on this record that Capitol’s refusal to pay 

had never been based upon a good faith legal defense, but simply reflected a 

calculated judgment to fight MSC to the end, forcing it to pay in blood, sweat and 

treasure for every penny eventually collected. On the merits of the demurrage 

claim, Capitol failed to present a legal defense of any substance, and belatedly 

raised a variety of ever-changing contentions after the time for discovery or 

hearing was over. Those facts, coupled with earlier correspondence indicating an 

adamant and legally unexplained resistance to the notion of MSC’s centralized 

demurrage billing procedure entitled the Commission to conclude that Capitol 

was not only knowing and willful in its refusal to pay, but that its policies, 

conducted as they were in bad faith, were tantamount to an unjust or unfair means 

of obtaining transportation by water at lower than applicable rates. Although it 

would not be proper to extend this rationale to cases involving refusal to pay 

based on honest differences, we think the conduct reflected in the present record 

was sufficiently egregious to support the Commission’s finding that the requisite 

element of fraud or concealment was here established. . . . A calculated effort in 

bad faith to avoid the payment of demurrage legitimately owing would, if 

successful, allow shippers and consignees to accomplish what Section 16 was 

intended to prevent[,] the receipt of carrier service at less than applicable rates and 

at less than rates charged to competitors. Thus while this case undoubtedly nears 

the outer limits of Section 16, we uphold the Commission’s finding of violation. 

Capitol Transportation, 612 F.2d at 1323-1324. 

In 1992, the Commission published a proposed interpretive rule intended to clarify 

jurisdiction in proceedings under section 10(a)(1) of the 1984 Act (the successor to section 16 of 

the 1916 Act). See Unpaid Freight Charges, FMC No. 92-46, 58 Fed. Reg. 7190 (Feb. 5, 1993), 

26 S.R.R. 735 (FMC 1993). The Commission promulgated a final interpretive rule based in part 

on the Capitol Transportation decision expressing its conclusion that use of an unjust or unfair 

device or means is an essential element of a section 10(a)(1) violation.

Section 10(a)(1) of the Shipping Act . . . states that it is unlawful for any person to 

obtain or attempt to obtain transportation for property at less than the properly 

applicable rates, by any “unjust or unfair device or means.” An essential element 

of the offense is use of an “unjust or unfair device or means.” In the absence of 

evidence of bad faith or deceit, the . . . Commission will not infer an “unjust or 

unfair device or means” from the failure of a shipper to pay ocean freight. An 

“unjust or unfair device or means” could be inferred where a shipper, in bad faith, 

 88 2 F.M.C.2d 2 F.M.C.2d
induced the carrier to relinquish its possessory lien on the cargo and to transport 

the cargo without prepayment by the shipper of the applicable freight charges. 

46 C.F.R. § 545.2. 

2. Respondent Acted as an NVOCC

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 two types of ocean 

transportation intermediaries (“OTI”). “The term ‘ocean transportation intermediary’ means an 

ocean freight forwarder or a non-vessel-operating common carrier.” 46 U.S.C. § 40102(20). 

“The term ‘ocean freight forwarder’ means a person that – (A) in the United States, dispatches 

shipments from the United States via a common carrier and books or otherwise arranges space 

for those shipments on behalf of shippers; and (B) processes the documentation or performs 

related activities incident to those shipments.” 46 U.S.C. § 40102(19). 

“The term ‘non-vessel-operating common carrier’ means a common carrier that – 

(A) does not operate the vessels by which the ocean transportation is provided; and (B) is a 

shipper in its relationship with an ocean common carrier.” 46 U.S.C. § 40102(17). To be an 

NVOCC, the entity must meet the Shipping Act’s definition of “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:

Ocean transportation intermediary means an ocean freight forwarder or a nonvessel-operating common carrier. For the purposes of this part, the term

(1) Ocean freight forwarder (OFF) means a person that – (i) In the United 

States, dispatches shipments from the United States via a common carrier 

and books or otherwise arranges space for those shipments on behalf of 

shippers; and (ii) Processes the documentation or performs related activities 

incident to those shipments; and 

(2) Non-vessel-operating common carrier (NVOCC) means a common carrier 

that does not operate the vessels by which the ocean transportation is 

provided, and is a shipper in its relationship with an ocean common carrier.

46 C.F.R. § 515.2(m). 

 89 2 F.M.C.2d 2 F.M.C.2d
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 Commission promulgated regulations providing examples of NVOCC services 

performed by OTIs. 

Non-vessel-operating common carrier services refers to the provision of 

transportation by water of cargo between the United States and a foreign country 

for compensation without operating the vessels by which the transportation is 

provided, and may include, but are not limited to, the following: 

(1) Purchasing transportation services from a common carrier and offering 

such services for resale to other persons;

(2) Payment of port-to-port or multimodal transportation charges; 

(3) Entering into affreightment agreements with underlying shippers;

(4) Issuing bills of lading or other shipping documents; 

(5) Assisting with clearing shipments in accordance with U.S. government 

regulations; 

(6) Arranging for inland transportation and paying for inland freight charges 

on through transportation movements; 

(7) Paying lawful compensation to ocean freight forwarders;

(8) Coordinating the movement of shipments between origin or destination 

and vessel;

(9) Leasing containers;

(10) Entering into arrangements with origin or destination agents; 

(11) Collecting freight monies from shippers and paying common carriers as 

a shipper on NVOCC’s own behalf. 

46 C.F.R. § 515.2(k).

 90 2 F.M.C.2d 2 F.M.C.2d
A prior case summarized the Commission’s work to ensure that shippers were protected 

from underfinanced NVOCCs. 

Because the licensed ocean freight forwarder was in a position to harm its 

shipper-customers and because such forwarders were often underfinanced and 

negligent in their duties, Congress required that they be bonded so that shippercustomers of the forwarders who were injured by the forwarders’ derelictions of 

duty would have recourse to a surety to ensure that their financial losses would be 

made good. After May 1, 1999, the effective date of OSRA, the other type of 

intermediary, the NVOCC located in the United States, was also required to be 

licensed and bonded. This act of Congress was welcome because even before the 

passage of OSRA, NVOCCs, like freight forwarders, had engaged in negligent 

conduct with respect to their handling of shippers’ cargoes and like some 

forwarders, they were underfinanced and disdainful of their duties toward their 

shipper-customers. See, e.g., Hugh Symington v. Euro Car Transport, Inc., 26 

S.R.R. 871 (1993); Adair v. Penn-Nordic Lines, 26 S.R.R. 11 (I.D., finalized, 

1991); Total Fitness Equipment, Inc. v. Worldlink Logistics, Inc., 28 S.R.R. 534 

(1998), affirmed as Worldlink Logistics, Inc. v. F.M.C., 203 F.3d 54 (D.C. Cir. 

1999), cases in which NVOCCs took shippers’ moneys and failed to make sure 

that the shipments were carried and delivered timely, causing shippers financial 

harm.

Crowley Liner Services, Inc. and Trailer Bridge, Inc. v. Puerto Rico Ports Authority, 29 S.R.R. 

394, 2001 FMC LEXIS 7 at *71-72 (ALJ 2001) (Respondent PRPA’s Motion to Dismiss or for 

Partial Summary Judgment Denied; Complainants Crowley’s and Trailer Bridges Motion to 

Dismiss Granted for the Most Part; Complaint Dismissed) (Settlement Approved, 29 S.R.R. 971 

(ALJ 2002)). 

The evidence shows that Respondent issued a house bill of lading for the door to port 

movement; listed its registration number as FMC # 023229N where N is used to denote an 

NVOCC; was solely licensed as an NVOCC; and was still licensed when the shipment took 

place. Further, the Shipping Agreement issued by Respondent contains the terms for movement 

of the shipment and directs payment to be made to Respondent, consistent with acting as an 

NVOCC. In addition, the terms of the movement was for door to port movement but Respondent 

only engaged Troy to ship the container from Port to Port, indicating that Respondent undertook 

responsibility for shipment and provided transportation from Complainant’s door to the port in 

Karachi while Troy provided transportation from the port in the United States to the port in 

Karachi. Accordingly, the evidence demonstrates that Respondent acted as an NVOCC on this 

shipment.

3. Section 41102(a) Elements

a. Knowingly and Willfully

Complainant contends that Respondent acted knowingly and willfully, for example by 

providing inaccurate information about the failure to pay. 

 91 2 F.M.C.2d 2 F.M.C.2d
To justify why Respondent failed to pay ocean freight charges, the Respondent 

falsely claimed that she paid a third party to pay TROY for ocean and shipping. 

The Respondent made up this fictitious story to try and convince the Complainant 

to pay ocean and shipping dues in Karachi, so she could keep the ocean and 

shipping charges for herself. It is highly unlikely and would have been 

unreasonable for the Respondent to pay a third party when all she had to do was 

pay TROY directly. This demonstrates that the Respondent knowingly and 

willfully acted in bad faith and deceit showing utter disregard for the law. 

Complainant Brief at 3. Complainant also asserts that Respondent admitted “that she reasonably 

suspected that her company would close at the time the booking was done in February 2019” and 

that she “concealed this information.” Reply Brief at 7.

Respondent claims that Complainant has a lack of knowledge of the shipping process, 

Respondent is a professional “very aware of the outcome of nonpayment of ocean shipment,” 

and that she “never had any intentions of not paying the ocean as she is well aware of her 

personal liability.” Respondent Brief at 1-2. 

Section 41102(a) of the Shipping Act prohibits any person from “knowingly and 

willfully” obtaining or attempting to obtain ocean transportation of property by various false 

activities, including false billing or classification, or by “any unjust or unfair device or means.” 

A person is considered to have “knowingly and willfully” violated the Shipping Act if the person 

had knowledge of the facts of the violation and intentionally violated or acted with reckless 

disregard, plain indifference, or purposeful, obstinate behavior akin to gross negligence. Rose 

International, Inc. v. Overseas Moving Network International, Ltd., 29 S.R.R 119, 164-165 

(FMC 2001); Portman Square Ltd., 28 S.R.R. 80, 84-85 (ALJ 1998) (Admin. final 1998); Ever 

Freight Int’l, 28 S.R.R. 329, 333 (ALJ 1998) (Admin. final 1998). “A calculated effort in bad 

faith to avoid the payment of demurrage legitimately owing would, if successful, allow shippers 

and consignees to accomplish what Section 16 was intended to prevent[,] the receipt of carrier 

service at less than applicable rates and at less than rates charged to competitors.” Capitol 

Transportation, 612 F.2d at 1324. 

Respondent has not alleged a good faith legal defense for her failure to pay but rather a 

variety of ever-changing contentions. The evidence includes emails in which Respondent 

repeatedly blamed the failure to pay on an unnamed third party. For example, Respondent stated:

• “Also, as I have advised there was another company involved, I am checking to see 

why they didn’t pay.” C. App. Ex. 21. 

• “We have paid the shipping costs to a third party . . . . give me an hour or 2 to see 

why this was not paid, even though we have sent the payment.” C. App. Ex. 23. 

• “I paid the fees you have to believe me, I talked to the company and they are sending 

the payment today, but it may take a few days.” C. App. Ex. 24. 

• “Once I received your payment, I paid it to the third party I used to book your 

shipment.” C. App. Ex. 27. 

 92 2 F.M.C.2d 2 F.M.C.2d
• “The company I paid the money to, needs to know if to refund me, so I can refund 

you , or should they pay the ocean directly ?” C. App. Ex. 28. 

• “They promised to pay it today or tomorrow.” C. App. Ex. 30. 

• “I have been asking them to pay it for the last 4 days, they should be able to pay it 

today or tomorrow. I will send you the proof once it was paid.” C. App. Ex. 32. 

• “I will keep following up with them and make sure they pay , but it may take another 

day , and in the meantime you are paying additional fees. I paid these fees a day after 

you submitted your payment to me, just so you know !” Respondent’s email response 

filed October 1, 2019, Ex. 5. 

However, Respondent no longer claims that a third party was responsible for the failure to pay

and Respondent now admits that she failed to make the payment. The statements in the 

contemporaneous emails regarding a third party are not credible. This type of active 

misinformation and deceit demonstrates knowledge and willfulness and caused a significant 

delay in obtaining the cargo. 

Respondent knowingly and willfully continued to promise a refund but failed to refund 

Complainant for the shipping costs he paid to Troy. C. App. Ex. 33 (“I am also confirming that 

the money was sent back to me, and I should be able to pay by Friday !”); C. App. Ex. 34 (“I will 

send you a refund shortly”); C. App. Ex. 35 (“The payment will be concluded in a day or 2, of 

course I will try to pay you as much as I am responsible for !”); C. App. Ex. 36 (“A wire for 

$1025 was initiated yesterday. You should have the payment by tomorrow in the bank account 

you have provided. The amount is the ocean cost that we failed to pay in time.”). This failure to 

refund despite repeated promises mirrors Respondent’s failure to initially pay the shipping 

charges, further undermines Respondent’s credibility, and demonstrates that her conduct was 

knowing and willful. 

Respondent indicated that she did not know whether Troy had been paid and blamed 

Complainant for a lack of knowledge of the shipping process, for example, not knowing the 

shipment’s arrival date and for requesting changes to the bill of lading. Respondent Brief at 4; 

C. App. Ex. 27; RPFF at 2-3. The evidence shows that Respondent did not provide Complainant 

with a copy of the bill of lading until after his shipment arrived and there is only one bill of 

lading in evidence. C. App. Ex. 5, 16, 17. The evidence does not support Respondent’s argument 

that changes to the bill of lading were made and even if a change was made, such a change does 

not excuse Respondent’s failure to pay the shipping charges. Moreover, Respondent, as a 

knowledgeable shipping professional, should have checked on the arrival date, ensured that the 

bill of lading was provided timely and accurately, and ensured that timely payment was made to 

Troy. 

The evidence demonstrates that when Respondent accepted Complainant’s booking, 

Respondent knew The Right Move might be closing. Although Respondent claims in some 

emails that The Right Move did not close until March of 2019, the evidence shows that 

Respondent knew the business might be closing when she accepted this booking in February of 

2019. C. App. Ex. 23, 36; R. App. Ex. 1, 2. Respondent acknowledges that her company’s 

 93 2 F.M.C.2d 2 F.M.C.2d
financial problems stemmed from problems with prior shipments. C. App. Ex. 27 (describing an 

abandoned shipment); RPFF at 2 (“I was informed that the freight was on hold, and It seems as 

the payment that was submitted was applied towards an old shipment that was still pending.”). 

Financial hardship does not justify the failure to pay shipping charges for subsequent shipments. 

Respondent knowingly and willfully opened a personal bank account to accept 

Complainant’s payment for this shipment, with the intent of keeping these funds separate from 

company funds. In a contemporaneous email, Respondent stated that the “booking was done 

under another company license, because I knew we may get to the point we have to close.” 

C. App. Ex. 27. She then explains problems with another shipment and says that “[s]ince I didn’t 

want your shipment to be effected in this process, I opened a bank account that was a business 

account, but had my name on it in order to be not associated it with the The Right Move, Inc 

financial burden.” C. App. Ex. 27; see also Complainant Brief at 10; C. App. Ex. 3. Opening a 

separate bank account to avoid comingling this transaction with her company’s funds indicates 

that she was acting knowingly and willfully.

Respondent asserts that she was an experienced professional and the evidence shows that 

she was a licensed NVOCC. Respondent deflected Complainant’s questions about payment for 

his shipment with misinformation about a third party and promises to pay, as well as opening a 

separate account for this transaction. This evidence is sufficient to demonstrate that she acted 

knowingly and willfully, as required for a violation of section 41102(a). 

b. Unjust or Unfair Device or Means

Complainant asserts that Respondent used an unjust or unfair device or means, including 

fraud and deceit, arguing that: 

There is an abundance of evidence in the record that establishes fraud and deceit 

by the Respondent. In February 2019, the Respondent knew or reasonably 

suspected that her company may close soon, but failed to disclose this material 

information to the complainant when they entered into an agreement. . . . This was 

a deliberate act of omission by the Respondent who knowingly and recklessly 

misled the Complainant just to obtain Complainant’s business. 

Complainant Brief at 4. Complainant also asserts that “Complainant made non-credible, 

inconsistent and deceitful claims about ocean payment” when she “in bad faith continued to 

deceitfully claim via email that she had paid the shipping dues albeit via a third party and that the 

payment should clear soon.” Complainant Brief at 5. 

Respondent asserts that she was an experienced professional aware of her 

responsibilities; that she continued to communicate with and try to help Complainant, even 

suggesting that he contact the FMC; and that she did not know when she accepted the booking 

that she would be unable to pay the shipping charges. Respondent Brief at 2.

To establish a violation of section 41102(a), “fraud or concealment is a necessary 

ingredient in the proof of an unjust or unfair device or means.” United States v. Open Bulk 

Containers, 727 F.2d 1061, 1064 (11th Cir. 1984); see also Rose Int’l, 29 S.R.R. at 163; 

 94 2 F.M.C.2d 2 F.M.C.2d
Waterman S.S. Corp. v. General Foundries, Inc., 26 S.R.R. 1424, 1429 (FMC 1994). “In the 

absence of evidence of bad faith or deceit, the Federal Maritime Commission will not infer an 

‘unjust or unfair device or means’ from the failure of a shipper to pay ocean freight.” 46 C.F.R. 

§ 545.2. “It is such fraud or concealment that in fact makes the practice unjust or unfair.” Open 

Bulk Containers, 727 F.2d at 1064. 

The decision in Nordana Lines states: 

Complainant acknowledges that the Commission now requires more than a 

showing that a respondent has failed to pay freight due because of a stubborn but 

good-faith refusal to pay a disputed rate or charge to support a claim that section 

10(a)(1) has been violated. As complainant correctly contends, to support such a 

charge, complainant must show some element of falsification, deception, fraud or 

concealment or some evidence of bad faith or deceit. Complainant cites several 

Commission decisions establishing these principles. Complainant argues that 

[Respondent] has demonstrated deceit and bad faith by obtaining Nordana’s 

transportation services and thereafter making a series of false promises to 

Nordana regarding its intention to pay the freight owed. 

Nordana Line AS v. Jamar Shipping, Inc., 27 S.R.R. 233, 1995 FMC LEXIS 8 at *7-8 (ALJ 

1995) (Notice not to review, April 19, 1995) (footnote omitted). 

The First Circuit, in Capitol Transportation, accepted the Commission’s finding that “the 

requisite element of fraud or concealment was established in this case by Capitol’s “unexplained 

and apparently unjustified avoidance of any payment of the amounts found due and owing.” 

Capitol Transportation, 612 F.2d at 1323. 

In this case, there is clear evidence that Respondent used unjust or unfair means. 

Respondent issued a house bill of lading from Alexandria, Virginia, to Karachi Port, Pakistan, 

and assumed responsibility for Complainant’s shipment. Respondent in bad faith failed to pay 

Troy, forcing them to collect ocean freight payment from Complainant in Karachi, Pakistan, 

even though she knew that the freight was prepaid by Complainant. When asked about the 

shipment, Respondent stated that a third party was handling the payment. C. App. Ex. 21, 23. 

There is no evidence in the record that a third party was used and it appears that this statement to 

Complainant was a material misrepresentation. In addition, Respondent misrepresented the status 

of her business when the shipment was booked and failed to timely disclose to the other common 

carriers and to Complainant that her business was in the process of closing. C. App. Ex. 23, 36; 

R. App. Ex. 1, 2. If Complainant had known this information before booking, he would have 

selected a different ocean transportation intermediary for his shipment.

This case is unusual because none of the Respondent’s communications with Troy and 

Maersk, who handled the shipment, are in the record. Respondent would have copies of these 

emails in her control and her failure to produce them leads to the inference that they are adverse 

to her interests. It is a reasonable inference that her communications with Troy were not entirely 

accurate. For example, Troy would only have shipped the cargo with the expectation of payment. 

Since CP World required proof from Complainant that he had prepaid the shipment, it is likely 

that Respondent failed to disclose to Troy that the shipment was prepaid, misleading them to 

 95 2 F.M.C.2d 2 F.M.C.2d
assume that payment would be made either by Respondent or by Complainant after the shipment 

arrived in Karachi, Pakistan. C. App. Ex. 18. If, as Respondent states, she made a payment that 

was applied to a different shipment, that would be evidence that this was not a unique situation 

but rather that Respondent had failed to pay for prior shipments. RPFF at 2 (“I was informed that 

the freight was on hold, and It seems as the payment that was submitted was applied towards an 

old shipment that was still pending.”); C. App. Ex. 27 (describing a previous abandoned 

shipment).

Some of Respondent’s arguments are hard to understand, for example, she states that the 

Complainant does not understand the challenges facing companies that ship household goods 

(seasonal business and lack of repeat customers) and states that “year after year after year, I have 

been through this same cycle” and that “it worked for 8 years prior and the business was 

successful.” This implies that the challenges were foreseeable and manageable. However, she 

also says that “[a]sking the respondent to foresee difficulties is unreasonable” and that “[a]t time 

of accepting the shipment, the respondent had no way of knowing she is facing harder times than 

usual.” Complainant Brief at 2. In this proceeding, foreseeability is not at issue. Rather, the issue 

is whether or not Respondent utilized unjust or unfair means or devices.

Failing to pay the ocean shipping charges, hiding the financial state of the company to 

induce Complainant to book with her, making a series of false promises, and blaming the lack of 

payment on a fictitious third party while Complainant’s goods were in limbo, support the finding 

that there was fraud or concealment. Accordingly, the evidence demonstrates unjust or unfair 

means, as required by the Shipping Act to establish a section 41102(a) violation. 

c. Obtaining Transportation at Less than Applicable Rates

Complainant asserts that:

Respondent was required to pay TROY port of loading and ocean freight shipping 

charges, and by failing to pay TROY; the Respondent in bad faith, breached the 

shipping agreement between the Complainant and the Respondent. All Respondent 

had to do was pay $1040.00 to TROY via credit card, money order, cashier’s 

check, money transfer or a regular check. The Respondent had already received 

$2595.00, so she had the money to pay TROY, but failed to do so in bad faith. 

Complainant Brief at 4.

Respondent admits that she failed to make the payment for the ocean transportation. 

Respondent’s Answer to Complainant’s Discovery Request (titled Motion to Compel) at 1. 

Respondent does not contest this element, conceding that the transportation occurred and that she 

did not make a payment for it. She argues, instead, that she intended to pay for the ocean 

transportation. Respondent Brief at 5.

Actions speaker louder than words. Although Respondent repeatedly said that she 

intended to pay the ocean shipping, she did not pay the shipping charge and did not refund 

Complainant after he paid. Her failure to pay and promises to pay delayed Complainant’s ability 

to obtain his shipment. If her payment was applied to another shipment, RPFF at 2, that just 

 96 2 F.M.C.2d 2 F.M.C.2d
demonstrates that this violation was not an isolated occurrence, a finding supported by 

Respondent’s acknowledgement of problems with other shipments. Financial problems do not 

justify the failure to pay for shipping. In addition, Respondent failed to pay the demurrage 

charges by Maersk that accrued on the container due to her failure to pay freight owed for the 

shipment. Respondent profited from obtaining transportation of this shipment without making 

any payment. 

Pursuant to the Shipping Act, a shipper may not “obtain or attempt to obtain” 

transportation for less than applicable charges. As an NVOCC, Respondent was the shipper in 

relation to Troy. Respondent obtained transportation of the cargo without making any payment 

for the shipment, instead, keeping the payment for herself. The evidence shows that Complainant 

paid Respondent for the shipment and then had to pay Troy for the shipment. C. App. Ex. 3, 9, 

41. Accordingly, Respondent obtained transportation at less than applicable rates as Respondent 

has not paid anything to Troy, Maersk, or Complainant for the shipment.

d. Conclusion

Respondent operated as an NVOCC when it issued a bill of lading assuming 

responsibility for transportation of cargo by water between the United States and a foreign port. 

For the shipment, Respondent was a shipper in relation to Troy within the meaning of the Act. 

46 U.S.C. § 40102(22)(E). Complainant establishes by a preponderance of the evidence that 

Respondent engaged in fraud or deceit as required to establish use of an unjust or unfair device. 

In addition, the evidence establishes that Respondent obtained transportation without making any 

payment and that Respondent acted knowingly and willfully. Therefore, the evidence shows that 

Respondent knowingly and willfully, by means of an unjust or unfair device or means, obtained 

transportation by water for property at less than the rates or charges which would otherwise be 

applicable in violation of section 41102(a) of the Shipping Act. Accordingly, Complainant has 

established by a preponderance of the evidence that Respondent violated section 41102(a) of the 

Shipping Act when she shipped Complainant’s household goods without making any payment.

4. Reparations 

a. Personal Liability

Complainant sued Respondent in her individual name, doing business as The Right 

Move. Complaint at 1. Complainant argues that the corporate veil should be pierced to find 

Respondent personally liable for the damages, relying in significant part on Respondent’s failure 

to respond to discovery. 

Respondent argues that “the Right Move Inc is a closed company, and that the FMC 

license was terminated. The only way to compensate the complainant at this point will be 

through the company bond that was in place at the time of conducting business.” Respondent 

Brief at 5. 

The Commission has addressed when it is appropriate to pierce the corporate veil, stating 

that the “federal common law that has been developed generally recognizes a two-prong test to 

 97 2 F.M.C.2d 2 F.M.C.2d
determine whether to disregard corporate form: the evidence must show (1) control and 

domination over the shell corporation, and (2) a federal violation.” Rose Int’l, 29 S.R.R at 166. 

The factual tests vary from circuit to circuit, but some of the major factors used to 

determine domination and control, and which we will consider, are as follows: 

(1) the nature of the ownership and control; (2) failure to maintain corporate 

minutes or adequate corporate records and failure to follow corporate formalities; 

(3) commingling of funds and other assets; (4) inadequate capitalization; 

(5) diversion of the corporation’s funds or assets to non-corporate uses; (6) use of 

the same office or business location by the corporation and its shareholders; 

(7) overlapping ownership, officers, directors and personnel; (8) the amount of 

business discretion displayed by the allegedly dominated corporation and 

(9) whether the corporations are treated as independent profit centers. 

Rose Int’l, 29 S.R.R at 167-168. Among the factors the Commission has considered in piercing 

the corporate veil are: “the nature of the corporate ownership and control, the failure to maintain 

adequate corporate records and minutes, and the failure to follow corporate formalities, including 

the approval of stock issues by an independent board of directors.” Ariel Mar. Group, Inc., 24 

S.R.R. 517, 530 (FMC 1987). 

Complainant contends that on “February 13, 2019, Respondent told Complainant to wire 

transfer payment to her personal bank account which was under her name ‘Michelle Franklin.’ 

On February 14, 2019, the money was transferred to Respondent Michelle Franklin’s personal 

account.” Complainant Brief at 10; C. App. Ex. 3. Respondent refused to answer Complainant’s 

discovery requests regarding business accounts, information exclusively under the control of 

Respondent. 

Because Respondent failed to provide discovery, there is limited information in the 

record. Moreover, comments made by Respondent to Complainant lack credibility. However, 

given that Respondent’s contemporaneous statements are the most directly relevant evidence in 

the record, they are probative. On April 9, 2019, Respondent sent a long email which stated that 

the “booking was done under another company license, because I knew we may get to the point 

we have to close.” C. App. Ex. 27. She then explains problems with another shipment and says 

that “[s]ince I didn’t want your shipment to be effected in this process, I opened a bank account 

that was a business account, but had my name on it in order to be not associated it with the The 

Right Move, Inc financial burden.” C. App. Ex. 27. This statement that Respondent used a 

different, new account for this shipment is consistent with Complainant’s allegations. This 

evidence, coupled with her failure to produce discovery, establishes that this shipment involved 

Michelle Franklin’s personal bank account, separate from her regular company account, and is 

evidence of commingling of funds and inadequate capitalization. 

Respondent’s refusal to provide discovery also supports findings proposed by 

Complainant that: Michelle Franklin is or was the sole owner of The Right Move, Inc.; from 

February 2019 to date, Michelle Franklin has been and still is the sole spokesperson, 

representative, owner, advocate, and employee of The Right Move; The Right Move has failed to 

observe corporate formalities in terms of documentation; The Right Move is not a separate entity 

from Michelle Franklin; The Right Move is or was taxed through Michelle Franklin’s personal 

 98 2 F.M.C.2d 2 F.M.C.2d
tax returns; Michelle Franklin treated the funds and assets of the Right Move as her own; and, 

The Right Move was being used by Michelle Franklin as a façade for her personal financial 

dealings and not as a separate corporate entity. C. App. Ex. 3; Respondent’s failure to respond to 

Complainant’s discovery: Request for the Production of Documents and Interrogatories. These 

factors weigh in support of piercing the corporate veil and finding Michelle Franklin personally 

liable.

Respondent’s argument that the only way to compensate the Complainant is through the 

company bond addresses the issue of collecting any reparations awarded. The Commission does 

not assist with collections of reparations awards and the Complainant may seek any available 

means to obtain compensation, including through the company bond (by contacting the bond 

company directly), from the Respondent, or other appropriate means. Moreover, Respondent’s 

license was revoked for failure to maintain the bond. It is reasonable to conclude that the bond 

may not have been in force at the time of the shipment at issue and may not be available to pay 

the claim.

Although Michelle Franklin was sued in her own name, during the transactions at issue, 

she acted in the company’s name. Therefore, it is necessary to pierce the corporate veil to find 

her personally responsible for any reparations. As discussed above, the evidence is sufficient to 

show that the corporate veil should be pierced. Accordingly, Michelle Franklin is liable in an 

individual capacity in addition to The Right Move for any reparations award. 

b. Calculation of Damages 

Complainant seeks a reparations award of $5,985.40, including shipping charges, 

container demurrage charges, and costs incurred while in Karachi obtaining release of his cargo; 

$73 in costs to file this complaint; and, $2,595 in restitution of fees paid to Respondent. 

Complainant Brief at 8-9. Complainant has the burden of proving entitlement to reparations. 

Respondent objects to the additional costs beyond the ocean freight, arguing that it was 

Complainant’s inexperience which caused delays, and also argues, in contradiction, that the 

customs clearance process in Pakistan is difficult and 17 to 20 days is a reasonable amount of 

time to clear customs. Respondent’s Response at 4-5. 

Pursuant to section 11(g) of the Shipping Act, “[i]f the complaint was filed within the 

period specified in section 41301(a) of this title, the Federal Maritime Commission shall direct 

the payment of reparations to the complainant for actual injury caused by a violation of this 

part.” 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, 3 F.M.B. 248, 249 (FMB 1950);

see also James J. Flanagan Shipping Corp. v. Lake Charles Harbor & Terminal Dist., 30 S.R.R. 

8, 13 (FMC 2003). 

 99 2 F.M.C.2d 2 F.M.C.2d
The statements of the Commission in [California Shipping Line, Inc. v. Yangming 

Marine Transport Corp., 25 S.R.R. 1213 (FMC 1990)] and the other cited cases 

are in the mainstream of the law of damages as followed by the courts, for 

example, regarding the principles 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 and Farm Equipment Ltd. v. Cosmos Shipping Co., Inc., 26 S.R.R. 788, 798-799 (ALJ 

1992) (Admin. final 1992). 

The evidence support’s Complainant’s argument that the delay in obtaining the cargo and 

additional costs from the delay were caused by Respondent’s failure to pay the shipping charges, 

which led to a hold on the shipment, and promises to pay, which delayed Respondent from 

paying the shipping charges earlier. There is not sufficient evidence in the record to support 

Respondent’s claims that the delay was caused by Complainant’s inexperience, changes to the 

bill of lading, or that customs clearance could have started earlier.

Complainant seeks $1,107.97 for the shipping charges that he paid and $935 in container 

demurrage charges caused by the Respondent’s delay. Complainant provides receipts supporting 

these amounts. C. App. Ex. 9, 10, 11, 12, 13, 41. The container in question was shipped to 

Pakistan and Complainant is not entitled to receive free shipping for his container. 

Complainant’s request for the shipping charges he paid for his container is therefore denied.

However, the evidence shows that the delay in obtaining the cargo was caused by Respondent’s 

actions. Therefore, Complainant has provided sufficient evidence to support his claim for 

container demurrage charges, totaling $935. 

In addition, Complainant seeks costs incurred while in Karachi obtaining release of the 

cargo, including $116.40 in taxi charges, $2,350 for lodging, and $1,476 for meals and 

incidentals. Complainant provides receipts for the taxi and lodging charges and refers to 

government regulations for the meals and incidental charges. C. App. Ex. 14, 41. Respondent’s 

arguments regarding the time spent by Complainant are confusing, as she says both that 17-20 

days is reasonable and that the delay was caused by Complainant’s lack of knowledge. Her 

arguments are not convincing. On the other hand, Complainant attaches appropriate 

documentation and support for the time spent to retrieve his belongings clearly delayed by 

Respondent’s failure to pay the shipping charges. Complainant has provided sufficient evidence 

to support his claim for costs obtaining release of his cargo, totaling $3,942.40. 

Complainant seeks compensation for the $73 in costs to file this complaint. Although 

attorney fees may be awarded, costs for filing the complaint are generally not awarded as they 

are not part of the actual injury determination nor the attorney fees. Accordingly, the request for 

costs to file the complaint is denied.

 100 2 F.M.C.2d 2 F.M.C.2d
Complainant also seeks restitution of the $2,595 that he paid the Respondent on 

February 14, 2019, for this shipment. Complainant Ex. E. In addition to profit, a portion of this 

fee may have been for trucking from Alexandria, VA, to Baltimore’s seagirt terminal or other 

charges, but because Respondent failed to provide evidence of these costs and refused to answer 

discovery related to transportation costs for the shipment, they cannot be deducted. C. App. Ex. 

5. Complainant has provided sufficient evidence to support his claim for restitution, totaling 

$2,595. 

Complainant has established that his actual injury caused by Respondent’s violation of 

the Shipping Act is in the amount of $7,472.40 ($935 container demurrage charges + $3,942.40 

taxi, meals, and lodging + $2,595 shipping charges paid to Respondent). Respondent is ordered 

to pay reparations in the amount of $7,472.40 to Complainant. The shipment arrived in Karachi, 

Pakistan, on March 31, 2019. C. App. Ex. 39. Therefore, interest on the reparation award runs 

from March 31, 2019, to be calculated by the Commission when this decision becomes 

administratively final. See 46 C.F.R. § 502.253. 

IV. ORDER

Upon consideration of the record herein, the arguments of the parties, the findings and 

conclusions set forth above, and the determination that Muhammad Rana established that 

Michelle Franklin, also known as Michal Franklin or Micah Franklin, doing business as The 

Right Move, Inc., violated the Shipping Act, 46 U.S.C § 41102(a), it is hereby

ORDERED that Muhammad Rana’s complaint for reparations against Michelle Franklin, 

also known as Michal Franklin or Micah Franklin, doing business as The Right Move, Inc., be 

GRANTED. It is

FURTHER ORDERED that Michelle Franklin and The Right Move, Inc. are jointly and 

severally ordered to pay Muhammad Rana reparations in the amount of $7,472.40 with interest 

on the reparations award running from March 31, 2019. It is

FURTHER ORDERED that any other pending motions or requests be DISMISSED AS 

MOOT. 

Erin M. Wirth

Chief Administrative Law Judge 

 101 2 F.M.C.2d 2 F.M.C.2d
FEDERAL MARITIME COMMISSION

Office of Administrative Law Judges

VERTERRA LTD., Complainant

v. 

D.B. GROUP AMERICA LTD. AND D.B. GROUP INDIA LTD., 

Respondents. 

DOCKET NO. 19-09 

Served: June 12, 2020 

BEFORE: Erin M. WIRTH, Chief Administrative Law Judge. 

INITIAL DECISION APPROVING CONFIDENTIAL SETTLEMENT AGREEMENT1

[Notice Not to Review served 7/14/2020, decision administratively final.]

I. Introduction

On May 26, 2020, Complainant VerTerra Ltd. (“VerTerra”) and Respondents D.B. Group 

America, Ltd. (“D.B. America”) and D.B. Group India, Ltd. (“D.B. India”) filed a joint petition

for approval of settlement and voluntary dismissal (“motion”). The parties attached a copy of the 

confidential settlement agreement and mutual release. The parties jointly move for approval of 

the settlement agreement, voluntary dismissal with prejudice, and confidentiality for the 

settlement agreement.

II. Procedural History

On December 4, 2019, a notice of filing of complaint and assignment was served noting 

that VerTerra had filed a complaint alleging violations of the Shipping Act including 46 U.S.C. 

§§ 41104, 41104(a), 41104(a)(2), 41104(a)(3), 41104(a)(4), 41104(a)(5), 40501, and 40502. 

Complainant alleges that Respondents committed the violations when Respondents coordinated 

approximately 293 discreet shipping jobs for Complainant from May 2016 through December 

2018. 

On January 13, 2020, Respondents filed a timely motion to dismiss the proceeding under 

Rule 12(b)(6) of the Federal Rules of Civil Procedure, or to stay the proceeding during the 

pendency of a related action filed with the New York state court. On January 28, 2020, 

Complainant filed a memorandum of law in opposition to Respondents’ motion to dismiss or 

stay. On February 4, 2020, Respondents filed a reply to Complainant’s memorandum. On 

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.

 102 2 F.M.C.2d 2 F.M.C.2d
February 6, 2020, Complainant filed a motion for leave to file a sur-reply to respondents’ motion 

to dismiss or stay proceedings. On March 5, 2020, an order was issued denying the Respondents’ 

motion to dismiss or stay proceedings and denying Complainant’s motion to file a sur-reply.

On March 16, 2020, Respondents filed their answer, denying any violation of the 

Shipping Act and raising affirmative defenses.

On March 31, 2020, the parties filed an initial joint status report, detailing a proposed 

schedule for discovery and depositions, and indicating that the parties had scheduled a 

preliminary mediation session with the Commission’s Office of Consumer Affairs and Dispute 

Resolution Services (“CADRS”). On April 2, 2020, a scheduling order was served. 

On May 1, 2020, the parties filed an updated joint status report, indicating that the parties 

had exchanged discovery requests and that they had conducted a day of mediation with the 

assistance of CADRS which did not resolve the dispute. 

On May 26, 2020, the parties filed a joint petition for approval of settlement and request 

for confidential treatment.

III. Discussion

Using language borrowed in part from the Administrative Procedure Act,2 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).

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. 

2 “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). 

 103 2 F.M.C.2d 2 F.M.C.2d
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 American Jurisprudence, 2d Ed., 777-778 

(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: 

Here. . . . the settlement is the result of more than a year’s worth of arm’s-length 

negotiations between two sophisticated entities, both of whom were represented 

by counsel at all times. The agreed resolution does not contravene any law or 

public policy. It is not an unjust or discriminatory device, nor will it have any 

adverse effect on any third parties or on the shipping public. Rather, the 

settlement is fair and reasonable, and reflects the Parties’ desire to resolve their 

issues without the need for costly and uncertain litigation. 

Motion at 3-4. This settlement resolves both this dispute and related litigation in the New York 

state court. 

Based on the representations in the 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 been discussing settlement over an extended period of time. The proceeding 

would require potentially expensive additional 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. There is no evidence of fraud, duress, undue influence, 

or mistake nor harm to the public. Accordingly, the settlement agreement is approved. 

 104 2 F.M.C.2d 2 F.M.C.2d
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 full text of the 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.

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 petition to approve the settlement agreement between Complainant 

VerTerra, Ltd. and Respondents D.B. Group America, Ltd. and D.B. Group India, Ltd. 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 

 105 2 F.M.C.2d 2 F.M.C.2d
FEDERAL MARITIME COMMISSION

ZERO WASTE CHALLENGE, LLC, Complainant

v. 

WORLDWIDE FREIGHT SERVICES, INC. D/B/A UNITED 

AMERICAN LINE, Respondent. 

DOCKET NO. 20-08 

Served: June 15, 2020 

On June 9, 2020, the Compla

NOTICE OF VOLUNTARY DISMISSAL

inant provided notice of its voluntary dismissal of its 

complaint in the above referenced docket pursuant to 46 C.F.R. §502.72(a)(1). Therefore, the 

above-captioned proceeding is discontinued. 

Rachel E. Dickon 

Secretary

 106 2 F.M.C.2d 2 F.M.C.2d
Issued: June 16, 2020 

FEDERAL MARITIME COMMISSION

Docket No. 20-10; Petition No. P1-20 

Investigation into Conditions Created by Canadian Ballast Water Regulations in the 

U.S./Canada Great Lakes Trade 

AGENCY: Federal Maritime Commission. 

ACTION: Notice of Investigation and Request for Comments. 

SUMMARY: The Federal Maritime Commission (Commission) has initiated an investigation 

into the allegations made in a petition filed by the Lake Carriers’ Association (Petitioner) that 

conditions created by the Government of Canada (Canada) are unfavorable to shipping in the 

United States/Canada trade.

DATES: Submit comments on or before July 22, 2020. 

ADDRESSES: You may submit comments, identified by Docket No. 20-10, by the following 

method: 

• Email: secretary@fmc.gov. For comments, include in the subject line: “Docket No. 20-10, 

Comments on Conditions Created by Canadian Ballast Water Regulations in the U.S./Canada 

Great Lakes Trade.” Comments should be attached to the email as a Microsoft Word or textsearchable PDF document.

Docket: For access to the docket to read background documents or public comments 

received, go to the Commission’s Electronic Reading Room at: 

www2.fmc.gov/readingroom/proceeding/20-10/. 

Unless otherwise directed by the commenter, all comments will be treated as confidential 

under 46 U.S.C. 42105 and 46 CFR 550.104. 

FOR FURTHER INFORMATION CONTACT: For questions regarding submitting 

comments or the treatment of confidential information, contact Rachel E. Dickon, Secretary; 

Phone: (202) 523-5725; Email: secretary@fmc.gov. For technical questions, contact: Peter J. 

King, Deputy Managing Director; Phone (202) 523-5800; Email: OMD@fmc.gov.

SUPPLEMENTARY INFORMATION:

I. INTRODUCTION

On March 6, 2020, the Lake Carriers’ Association (Petitioner), a trade association made 

up of U.S. owners and operators of vessels serving the Great Lakes (Lakers), filed a petition 

 107 2 F.M.C.2d 2 F.M.C.2d
alleging that conditions created by Transport Canada, an agency of the Government of Canada, 

are unfavorable to shipping in the United States/Canada trade, pursuant to Section 19(1)(b) of the 

Merchant Marine Act, 1920 (Section 19) codified in 46 U.S.C. 42101. Section 19 authorizes the 

Federal Maritime Commission (Commission) to investigate these conditions and to adopt 

regulations to adjust or meet such conditions. In this instance, Petitioner requests that the 

Commission adopt regulations in order to remedy a condition it alleges will result in irreparable 

harm to Petitioner’s members.

II. SUMMARY OF PETITION

Petitioner argues that Transport Canada’s proposed regulations to require the installation 

of ballast water management systems (BWMS) on Laker vessels will effectively drive out U.S.-

flag vessels from the cross-lakes U.S. export trade to Canada. These regulations, which were 

proposed by Transport Canada on June 8, 2019, would require Canadian vessels and vessels in 

waters under Canadian jurisdiction to develop and implement a ballast water management plan 

and comply with a performance standard that would limit the number of organisms discharged, 

with a compliance date of September 8, 2024. Ballast Water Regulations, Canada Gazette, Part 

1, Vol. 153, No. 23 at 15. 

The proposed regulations would exempt vessels of a non-signatory party to the 

International Maritime Organization (IMO) International Convention on the Management of 

Ships’ Ballast Water and Sediments, such as the United States, if those vessels operate 

exclusively within the Great Lakes Basin and do not load ballast water from or release ballast 

water into Canadian waters. Petitioner alleges that this exemption would not apply to its 

members’ vessels because they need to load ballast water after offloading export cargo at 

Canadian ports, and that in order for its members’ vessels to comply with the proposed 

regulations, they would need to install a BWMS on each vessel. 

Petitioner argues that because of the vessel type and age differences between the 

Canadian and U.S. fleets, the respective costs of implementing the proposed regulations will be 

very different. Transport Canada estimates the cost of implementing the requirements on all 

Canadian vessels currently serving the trade would be approximately 632 million Canadian 

dollars. Petitioner argues that implementing these same regulations on all U.S. vessels currently 

serving the trade would cost nearly 1.132 billion Canadian dollars. Ultimately, Petitioner argues 

the proposed regulations will essentially double the U.S. Laker cost of participating in the trade 

while Canadian carriers would experience a less than 1 Canadian dollar per ton cost increase.

Petitioner argues that its members cannot comply with the regulations because of the 

prohibitive cost, and they cannot avoid the regulations and continue to carry United States 

exports to Canada because they must load ballast water as they offload cargo at Canadian ports. 

Petitioner also states that its members cannot operate their vessels outside of the Great Lakes and 

St. Lawrence River because of their ship design and current U.S. Coast Guard certification is 

restricted to service on the Great Lakes and St. Lawrence River. Should the regulations be 

finalized and if U.S. vessels were thereby forced out of the trade, Petitioner contends that 

Canadian vessels would enjoy a monopoly on the cross-lakes U.S. export trade to Canada. 

Petitioner argues that prohibiting the loading of ballast water without a BWMS serves no 

 108 2 F.M.C.2d 2 F.M.C.2d
environmental purpose because, unlike discharging ballast water, loading ballast water in 

Canadian waters does not result in the potential introduction of nonnative organisms into 

Canadian waters. Petitioner asserts that the regulations serve no environmental purpose and the 

cost of compliance is prohibitively high for U.S. vessels, and suggests that the real purpose of the 

regulations is to drive out U.S. vessels from this trade.

Petitioner is asking the Commission to issue a regulation to meet the unfair competitive 

conditions created by Transport Canada. Petitioner has provided a proposed regulation that 

would assess a fee of 300,000.00 U.S. dollars each time a Canadian vessel enters any U.S. port. 

III. INVESTIGATION AND INITIAL REQUEST FOR COMMENTS

The Commission has reviewed the Petition and determined that it meets the threshold 

requirements for consideration under the Commission’s regulations. See 46 CFR Part 550, subpart 

D. The Commission has therefore determined to initiate an investigation into whether the 

proposed Transport Canada regulations create unfavorable conditions to shipping in the foreign 

trade of the United States. To that end, the Commission has designated the Deputy Managing 

Director to lead an investigation into the Petitioner’s allegations and to prepare a report on the 

investigation’s findings and recommendations for Commission consideration. 

As an initial step in the investigation, interested persons are requested to submit views, 

arguments and/or data on the Petition. Comments may address any aspect of the Petition. 

As the Commission proceeds with this investigation, it may determine the need to request 

additional comment or gather information through other means as authorized under 46 U.S.C. 

42104 and 46 CFR part 550. 

By the Commission. 

Rachel E. Dickon 

Secretary

 109 2 F.M.C.2d 2 F.M.C.2d
FEDERAL MARITIME COMMISSION

LOGFRET, INC., Complainant

v. 

KIRSHA, B. V., LEENDERT JOHANNESS BERGWERFF A/K/A 

HANS BERGWERFF, LINDA SIEVAL, Respondents. 

DOCKET NO. 18-10 

Served: June 22, 2020 

BY THE COMMISSION: Michael A. KHOURI, Chairman, Rebecca F. DYE, Daniel B. 

MAFFEI, Louis E. SOLA, and Carl W. BENTZEL, Commissioners. 

ORDER AFFIRMING DENIAL OF ATTORNEY FEE PETITION

This case is before the Commission on Respondents’ exceptions to an Administrative 

Law Judge (ALJ) order denying Respondents’ petition for attorney fees. In the underlying 

proceeding, Complainant alleged that Respondents violated 46 U.S.C. §§ 41103(a) and 

41104(a)(1). The ALJ dismissed the complaint, and neither party appealed. Respondents 

subsequently petitioned for attorney fees as prevailing parties under 46 U.S.C. § 41305(e) and 46 

C.F.R. § 502.254. The ALJ denied the petition, and Respondents filed exceptions. Because the 

ALJ did not err, the Commission affirms the order denying the attorney fee petition. 

I. BACKGROUND

A. Allegations 

As the ALJ noted, this case is part of a larger dispute between a Dutch common carrier – 

Logfret B.V. – and its former managing director, Respondent Leendert Johannes Bergwerff. Am. 

Compl. ¶¶ 1, 6, 7.1 Mr. Bergwerff, a Dutch national, was the managing director of Logfret B.V. 

from 2006 until 2017. Id. ¶ 7. Mr. Bergwerff is also the owner and managing director of 

Respondent Kirsha B.V., another Dutch corporation. Id. ¶¶ 11-12.2 Respondent Linda Sieval, a 

Dutch national, was Logfret B.V.’s sales manager until 2018. Id. ¶ 19. Complainant Logfret, 

Inc., is a Delaware corporation and a licensed non-vessel-operating common carrier (NVOCC) 

1 In ruling on Respondents’ motion to dismiss the amended complaint, the ALJ was generally 

limited to considering the amended complaint and exhibits thereto, and the ALJ was required to accept the 

well-pleaded factual allegations as true. I.D. at 3. Similarly, in describing the background of this matter, the 

Commission, unless otherwise noted, will rely on the amended complaint and exhibits thereto.

2 According to Respondents, Kirsha B.V. is a holding company that owns 27.4% of Logfret B.V. 

and 50% of Logfret B.V.’s landlord. Exceptions at 11. 

 110 2 F.M.C.2d 2 F.M.C.2d
and freight forwarder. Id. ¶¶ 3, 4. Complainant is a subsidiary of Logfret Group (which is in turn 

a subsidiary of Logistique Holding SAS) and is an affiliate of Logfret B.V. Id. ¶¶ 3, 5. 

Complainant did not name Logfret B.V. as a respondent in this case. 

According to Complainant, Mr. Bergwerff, Ms. Sieval, and Kirsha B.V. “committed 

numerous unethical and illegal activities with respect to the management and governance of 

Logfret B.V., including but not limited to improper leasing and refurbishment of new offices, 

improper accession to a new management agreement, and misappropriation of Logfret B.V. 

assets.” Id. ¶ 25. Further, in a letter attached to the Amended Complaint, Logistique Holding 

SAS accused Mr. Bergwerff of, among other things, “poisoning the personnel of Logfret against 

its majority shareholder, reaching out to competitors and potentially even sharing companysensitive information with competitors of LH,” “trying to snap up employees from the Logfretgroup to start working for one of [his] own companies,” and “ask[ing] employees of Logfret to 

have Logfret enter into transport contracts with competitors of the Logfret-group.” Am. Compl. 

Ex. 6 at 1-2. This latter conduct, the letter states, was impermissible because “[b]eing part of the 

Logfret-group, Logfret [B.V.] is obliged to grant business – where possible – within the Logfret 

group.” Id. at 1.

Regarding granting business outside the Logfret group, Mr. Bergwerff, with Ms. Sieval’s 

assistance, “directed the staff of Logfret B.V. to handle inbound shipments to the United States 

through Delmar USA rather than [Complainant], for at least two accounts.” Am. Compl. ¶ 32.3

This was allegedly part of a plan whereby Mr. Bergwerff and Ms. Sieval would use the 

infrastructure, employees, and resources of Logfret B.V. to issue Delmar USA bills of lading for 

inbound shipments to the United States. Id. ¶ 31; see also id. ¶ 36. Additionally, Complainant 

claims, Mr. Bergwerff, Ms. Sieval, and Kirsha B.V. used “Logfret Cargo Line,” a “fictitious 

entity” to issue fraudulent bills of lading. Id. ¶¶ 27, 38. In May 2017, Mr. Bergwerff was 

dismissed as managing director of Logfret B.V. Id. ¶ 39. 

B. Procedural History

Complainant filed a complaint in November 2018 alleging that Respondents violated 46 

U.S.C. § 41103(a), which prohibits a common carrier, marine terminal operator, or ocean freight 

forwarder from knowingly disclosing, offering, soliciting, or receiving information about a 

shipment without the consent of shipper or consignee if the information may be used to the 

detriment of the shipper, consignee, or any common carrier, or if the information would 

improperly disclose the business transaction to a competitor. Although Complainant alleged 

generally that the Commission had jurisdiction, Compl. ¶ 9, it did not allege that Respondents 

were common carriers, marine terminal operators, or ocean freight forwarders subject to 

§ 41103(a). Complainant sought damages of $ 2 million.

Respondents moved to dismiss the complaint for lack of subject matter and personal 

jurisdiction, arguing that Complainant failed to allege that Respondents were regulated entities. 

Respondents also argued more generally that Complainant “sought to misrepresent internal 

3 Delmar USA is a licensed NVOCC and freight forwarder and a competitor of Complainant. Am. 

Compl. ¶¶ 17, 34.

 111 2 F.M.C.2d 2 F.M.C.2d
management/employment disputes between Complainant and Respondents as violations of U.S. 

federal shipping laws.” Resp. Mem. Mot. Dismiss at 1.

In response, Complainant moved to amend the complaint and opposed the motion to 

dismiss. In the amended complaint, Complainant alleged that Respondents were common 

carriers, Am. Compl. ¶¶ 19-21, and, additionally, that by “arranging and benefiting from the 

provision of ocean transportation of cargo . . . via the fictitious and unregistered entity ‘Logfret 

Cargo Line,’” Respondents acted as “de facto” common carriers and NVOCCs, id. ¶ 30. 

Complainant reiterated the allegation that Respondents violated 46 U.S.C. § 41103(a) when they 

routed Logfret B.V. shipments through Delmar USA instead of Complainant. Id. ¶¶ 47-51. 

Complainant also added a new count alleging that Respondents violated 46 U.S.C. § 

41104(a)(1)4 by allowing “the shipper of the cargo moving on the fraudulent [Logfret Cargo 

Line] bill of lading to obtain transportation for property at less than the rates that would have 

otherwise applied if the shipper had obtained transportation from the underlying carrier under 

another rate, such as its tariff rate.” Id. ¶ 45. 

The ALJ granted the motion to amend but allowed the parties to continue to brief the 

motion to dismiss, including Respondents’ arguments that the amended complaint did not cure 

the jurisdictional defects in the original complaint. On September 17, 2019, the ALJ dismissed 

the amended complaint with prejudice, finding that Complainant had not adequately alleged that 

Respondents were common carriers or otherwise subject to §§ 41103(a) or 41104(a)(1). I.D. at 

13, 19. Neither party filed exceptions to the ALJ’s decision, which became final on October 21, 

2019. 

Respondents subsequently petitioned for attorney fees. The ALJ permitted Respondents 

to supplement their petition to address whether they were eligible for and entitled to fees and 

granted Complainant additional time to respond.5

 On February 20, 2020, the ALJ denied 

Respondents’ petition for attorney fees. The ALJ found that there was no evidence that the 

proceeding was “frivolous, improperly motivated, objectively unreasonable, or otherwise 

4 Section 41104(a)(1) of Title 46 provides that a “common carrier, either alone or in conjunction 

with any other person, directly or indirectly, may not . . . allow a person to obtain transportation for property 

at less than the rates or charges established by the carrier in its tariff or service contract by means of false 

billing, false classification, false weighing, false measurement, or any other unjust or unfair device or 

means.”

5 Complainant moved to strike the petition for attorney fees as premature, arguing that the Initial 

Decision was not final because the time to file an appeal with a federal court of appeals had not expired. 

The ALJ correctly denied the motion to strike. Further, to correct any misunderstanding, the Complainant 

in this case could not have successfully appealed. A party who fails to file exceptions to an ALJ decision 

cannot subsequently appeal that decision to a federal court of appeals. Rather, a party must first appeal to 

the Commission by filing exceptions. If the party disagrees with the Commission decision on exceptions, 

then the party can appeal to federal court. In other words, a party must exhaust its administrative remedies 

before going to court. See 46 C.F.R. § 502.227(a)(4) (“A decision or order of dismissal by an administrative 

law judge shall only be considered final for purposes of judicial review if the party has first sought review 

by the Commission pursuant to this section.”).

 112 2 F.M.C.2d 2 F.M.C.2d
appropriate for an award of attorney fees. Ord. Denying Pet. at 6. Respondents filed exceptions, 

which are ripe for Commission review.

II. DISCUSSION 

Section 41305(e) of Title 46 provides that the Commission may award the prevailing 

party reasonable attorney fees. See also 46 C.F.R. § 502.254(a). The Commission conducts a 

two-step inquiry in determining whether to award fees. First, the Commission considers whether 

a petitioner is eligible for fees, that is, whether it is a “prevailing party.” If the answer is yes, the 

Commission considers whether it should award fees to the petitioner. See Baltic Auto Shipping, 

Inc. v. Hitrinov, Docket No. 14-16, 2017 FMC LEXIS 16, *22-*25 (FMC Oct. 25, 2017); Edaf 

Antillas, Inc. v. Crowley Caribbean Logistics, LLC, Docket No. 14-04, 2016 FMC LEXIS 58, 

*12-*14 (FMC Sept. 14, 2016). Here, although Respondents are prevailing parties, the 

Commission concludes that they are not entitled to attorney fees. 

A. Standard of Review

The Commission reviews the ALJ’s denial of Respondents’ petition for attorney fees de 

novo. See 46 C.F.R. § 502.254(h); 46 C.F.R. § 502.227(a)(6); see also Edaf Antillas, 2016 FMC 

LEXIS 58 at *11. Additionally, Respondents, as the parties seeking an award of attorney fees, 

bear the burden of establishing that they are eligible for and entitled to fees, documenting the 

appropriate hours, and justifying the reasonableness of the rates. Edaf Antillas, 2016 FMC 

LEXIS 58 at *11. The standard of proof is preponderance of the evidence. Cf. Octane Fitness, 

LLC v. ICON Health & Fitness, Inc., 572 U.S. 545 (2014) (rejecting clear-and-convincingevidence standard for fee-shifting in patent cases and noting that preponderance is standard 

generally applicable in civil actions); Verisign, Inc. v. XYZ.COM LLC, 891 F.3d 481, 484-86 (4th

Cir. 2018) (adopting preponderance standard for fee-shifting in false advertising case under 

Lanham Act).

B. Eligibility for Attorney Fees

A respondent is a “prevailing party” for purposes of attorney fees if it has “rebuffed” a 

complainant’s challenge. Baltic, 2017 FMC LEXIS 16 at *23 (“A respondent prevails when the

complainant’s challenge is rebuffed ‘irrespective of the precise reason for the court’s decision.’”) 

(quoting CRST Van Expedited, Inc. v. EEOC, 136 S. Ct. 1642, 1651 (2016)). The ALJ found that 

Respondents were prevailing parties because their motion to dismiss was successful and the 

amended complaint was dismissed with prejudice. Ord. Denying Pet. at 4. Neither party disputes 

this conclusion, and the Commission agrees that Respondents are eligible for an award of fees. 

C. Entitlement to Attorney Fees 

In determining whether the Commission should award attorney fees, the primary 

consideration is “whether such an award is consistent with the purposes of the Shipping Act, and 

any factors the Commission relies upon in individual cases should be consistent with these

purposes.” Final Rule: Organization and Functions; Rules of Practice and Procedure; Attorney 

Fees, 81 Fed. Reg. 10508, 10509 (Mar. 1, 2016). The Commission’s analysis considers several 

factors: frivolousness, objective unreasonableness (in the factual and in the legal components of 

 113 2 F.M.C.2d 2 F.M.C.2d
a case), motivation, and deterrence and compensation. Edaf Antillas, 2016 FMC LEXIS 58 at 

*14. 

1. Objective Unreasonableness

The ALJ determined that while Complainant’s claims, particularly regarding whether 

Respondents were regulated entities, were unsuccessful, they were not frivolous or clearly 

without merit. Ord. Denying Pet. at 6. The ALJ noted that the factual situation was unusual and 

there were no similar cases that could have provided clear guidance. Id.

On appeal, Respondents argue that Complainant’s claims were objectively unreasonable 

because: (a) Complainant’s initial complainant failed to allege that Respondents were regulated 

entities; (b) Complainant contradicted its allegations that Mr. Bergwerff and Ms. Sieval were 

common carriers in its opposition to the motion to dismiss; (c) Complainant’s counsel made 

arguments that counsel should have known were meritless; and (d) Complainant’s allegations 

that Kirsha B.V. was a common carrier were based on false statements. Complainant does not 

address these arguments. Rather, it emphasizes that unlike in Edaf Antillas, where the 

Commission awarded fees based on the complainant failing to prosecute its claims and respond 

to ALJ orders, Complainant here fully engaged with the administrative process and timely 

complied with all ALJ orders. 

As the ALJ pointed out, “objective unreasonableness” “is generally used to describe 

claims that have no legal or factual support.” Viva Video, Inc. v. Cabrera, 9 F. App’x 77, 80 (2d 

Cir. 2001). It means a claim is “clearly without merit or otherwise patently devoid of a legal or 

factual basis.” Insurent Agency Corp. v. Hanover Ins. Co., Case No. 16-cv-3076, 2020 U.S. Dist. 

LEXIS 2565, at *10 (S.D.N.Y. Jan. 8, 2020) (internal citations and quotation marks omitted).6

The mere fact that a respondent has prevailed does not render a complainant’s claims objectively 

unreasonable, otherwise prevailing respondents would be per se entitled to attorney fees, an 

approach the Commission has rejected. 81 Fed. Reg. at 10509 (noting that “[t]here should be no 

general presumption for or against awarding attorney fees”); see also Chivalry Film Prods. v. 

NBC Universal, Inc., Case No. 05-cv-5627, 2007 U.S. Dist. LEXIS 86889, at *6 (S.D.N.Y. Nov. 

27, 2007). Further, “the fact that a defendant has prevailed on a motion to dismiss or on summary 

judgment does not require the court to award fees.” Chivalry Film Prods., 2007 U.S. Dist. 

LEXIS 86889 at *6. 

Although Complainant’s allegations and arguments that Respondents were common 

carriers were unpersuasive, they were not so patently devoid of merit so as to weigh in favor of 

awarding fees. Complainant alleged that two employees of a common carrier (Logfret B.V.) used 

their positions with the carrier to arrange ocean transportation to their benefit, and to the 

detriment of Complainant, a member of their corporate family, in violation of the Shipping Act. 

Complainant further alleged that these two respondents issued fraudulent bills of lading on 

6 Although courts list “frivolousness” and “objective unreasonableness” as separate factors, they 

overlap significantly, and the parties have not argued that the Commission should distinguish between the 

two factors. See Creazioni Artistiche Musicali, S.R.L. v. Carlin Am., Inc., Case No. 14-cv-9270, 2017 U.S. 

Dist. LEXIS 124082, *9 (S.D.N.Y. Aug. 4, 2017) (noting that frivolous factor “clearly overlaps 

significantly with the consideration of objective unreasonableness, although the Second Circuit has 

indicated that the two factors are ‘not necessarily coextensive’”). 

 114 2 F.M.C.2d 2 F.M.C.2d
behalf of a nonexistent entity. And Complainant alleged that they did so via Respondent Kirsha 

B.V. The ALJ found that although Logfret B.V. may have acted as a common carrier, 

Complainant did not adequately allege that Respondents themselves did. I.D. at 16. 

It appears that Complainant’s basic argument was that by using a common carrier to 

pursue their own interests, Respondents acted ultra vires and thus acted as common carriers in 

their own right. As the ALJ pointed out, there is little Commission caselaw discussing that 

scenario. Consequently, one cannot characterize the argument as clearly without merit. This case 

is not Edaf Antillas, where the complainant wasted the respondents’ and Commission’s time and 

resources by failing to prosecute its claims and respond to orders. Edaf Antillas, 2016 FMC 

LEXIS 58 at *15. It is more similar to Baltic, where the nonprevailing complainant made 

colorable arguments. 2017 FMC LEXIS 16 at *28-*31. 

Turning to Respondents’ specific arguments, it is true that the initial complaint did not 

allege that Respondents were entities subject to 46 U.S.C. §§ 41103(a) or 41104(a)(1). But this 

mistake alone is insufficient to justify fee-shifting, especially given that Complainant attempted, 

albeit unsuccessfully, to amend its complaint to cure the error.

Nor did Complainant “readily, lucidly, and unequivocally” withdraw its allegations that 

Mr. Bergwerff and Ms. Sieval were common carriers in its opposition to the motion to dismiss, 

as Respondents claim. Exceptions at 10-11. Respondents point out that Complainant argued that: 

Here Respondents not only participated in the violation of 46 U.S.C. § 41301(a) 

[sic] but without question also contributed to the harms inflicted on Complainant. 

As noted, Kirsha B.V. is a common carrier. The fact that the other two Respondents 

are not common carriers is not a magic talisman that absolves them of 

responsibility—or liability—for the damages that resulted from their actions.

Complaint Opp. at 9-10 (emphasis added). But later in this document, Complainant reiterates its 

argument that Mr. Bergwerff and Ms. Sieval were “de facto” common carriers. Complainant 

Opp. at 14. In other words, Complainant did not admit that its allegations were spurious; rather, 

it made alternative arguments, a relatively common legal strategy. Order Denying Pet. at 5 (“[I]t 

is common to have alternative theories of legal liability . . . .”). 

As for Respondent Kirsha B.V., Respondents argue that Complainant formulaically 

alleged it was a common carrier without adequate factual allegations, and, additionally, that 

Complainant made false statements about Kirsha B.V. that cannot establish colorable allegations 

under the Shipping Act. Exceptions at 11-14. Respondents, appear, however, to conflate the 

pleading standard with the objective unreasonableness factor for attorney fees. The insufficiency 

of Complainant’s allegations is why the ALJ dismissed the complaint. But that does not mean 

that attorney fees are warranted.

Moreover, Respondents have not established that Complainant made false statements. 

The statements Respondents rely on come from Complainant’s opposition to the motion to 

dismiss, where Complainant listed examples of conduct that the Commission has deemed 

“holding out” and “assuming responsibility” for purposes of determining whether an entity is a 

common carrier. Complainant’s Opp. at 7-8. Complainant explained that its “understanding 

 115 2 F.M.C.2d 2 F.M.C.2d
[was] that Kirsha B.V. performed all of the above unlicensed NVOCC activities when it was in 

operation and as such is subject to Commission jurisdiction, but, as noted, discovery is needed to 

reveal additional facts confirming the same.” Id. at 8. By making this argument, it not clear that 

Complainant was making false statements, as Respondents’ claim. Moreover, the only 

“evidence” that these statements were false are Mr. Bergwerff’s declaration and Respondents’ 

arguments in their exceptions. 

More concerning, however, is that Complainant argued in opposing the motion to dismiss 

that the Commission had jurisdiction over Respondents because they were “any other persons” 

under §§ 41103(a) and 41104(a)(1). Both statutes prohibit a common carrier, “either alone or in 

conjunction with any other person,” from engaging in specified conduct.7 The plain language of 

the statutes indicate that the prohibitions apply to common carriers, not “any other person.” 

Further, in DNB Exports, LLC v. Barsan Global Lojistiks ve Gumruk Musavirligi A.S., the 

complainant argued that § 41103(a) applied to Respondent Impexia as “any other person.” 

Docket No. 11-07, 2014 FMC LEXIS 2, *82-*86 (ALJ Jan. 24, 2014), rev’d on other grounds, 

33 S.R.R. 670 (FMC 2014). The ALJ implicitly rejected that argument, holding that § 41103(a) 

applies only to common carriers, marine terminal operators, and ocean freight forwarders. Id. at 

*93. Complainant should have known that the Commission in DNB had rejected the “any other 

person argument”: Complainant’s counsel here was counsel for Impexia in the DNB case. But 

that alone does not make Complainant’s claims objectively unreasonable.

In sum, Complainant’s claims that Respondents were regulated entities subject to §§ 

41103(a) and 41104(a)(1) were weak and dismissed accordingly. But the ALJ correctly found 

that they were not objectively unreasonable. Consequently, this factor does not weigh in favor of 

an attorney fee award.

2. Motivation

Similarly, the “motivation” factor does not weigh in favor of awarding Respondents fees. 

A party is improperly motivated where it asserts claims not because of their merit, but because 

the party “seeks to knowingly gamble[] on an unreasonable legal theory in order to achieve a 

secondary gain,” such as the leveraging of a settlement. Creazioni, 2017 U.S. Dist. LEXIS 

124082 at *10 (quoting Agence Fr. Presse v. Morel, No. 10-cv-2730 (AJN), 2015 U.S. Dist. 

LEXIS 189008 (S.D.N.Y. Mar. 23, 2015)). The ALJ found that although it was possible that 

Complainant had an improper motive, there was insufficient evidence to determine 

Complainant’s motivation.

Respondents argue that it is “clear” that Complainant’s primary motivation is to harass. 

Exceptions at 7. According to Respondents, “Complainant amply demonstrates it intended a 

frivolous suit by consistently alleging facts that underscored management disputes among the 

owners of Logfret B.V., and by the allegation of Shipping Act violations in strained language 

which was ultimately found by the ALJ to be legally and factually insufficient.” Id. at 6-7. 

Respondents also emphasize that Complainant sought damages of $2 million, which it 

characterizes as “an amount intended to cause harassment and anguish to the two individual 

Respondents.” Id. at 7. Complainant counters that it brought its claims in a “in a good-faith

7 Section 41103(a) also applies to marine terminal operators and ocean freight forwarders. 

 116 2 F.M.C.2d 2 F.M.C.2d
attempt to redress, under US federal law and jurisprudence, significant injury inflicted upon it by 

the Respondents” and that it “was, and remains, protective of its business interests and willing to

guard these interests through enforcement of all potentially applicable legal remedies.” 

Complainant Reply to Exceptions at 10. 

The ALJ did not err in finding insufficient evidence of improper motivation. That 

Complainant mentioned the Logfret B.V. management dispute in its complaint does not mean 

that the complaint was made solely to harass Respondents. That parties (or their affiliates) may 

be engaged in other litigation in other fora does not make it improper for a party to bring a nonfrivolous Shipping Act claim. Nor is the amount of damages sought particularly probative as to 

Complainant’s motive. And there is no evidence that Complainant was using this case to force a 

settlement or other outcome in the parties’ other litigation.

3. Compensation and Deterrence

Both parties suggest that considerations of compensation and deterrence support their 

preferred outcome. Respondents argue that awarding fees would deter complainants from using 

Commission facilities for purposes for which they were not intended. Exceptions at 8. 

Complainant contends that awarding fees would have a chilling effect on those who want to 

bring good-faith claims before the Commission. Complainant Reply to Exceptions at 7-8. 

The Commission agrees with the ALJ that the “purposes of the Shipping Act are met 

when complainants are able to raise potential violations, even under unusual or unique 

circumstances, without the chilling impact of having to pay Respondents’ attorney fees.” Order 

Denying Pet. at 6. Consequently, this factor weighs against imposing fees.8

III. CONCLUSION

For the reasons set forth above, the factors on balance weigh against awarding attorney 

fees, and the Commission thus affirms the ALJ’s denial of Respondents’ attorney fee petition.

THEREFORE, IT IS ORDERED, That Respondents’ Petition for Attorney’s Fees be DENIED.

Finally, IT IS FURTHER ORDERED, That this proceeding be discontinued. 

By the Commission. 

Rachel E. Dickon 

Secretary

8 The ALJ questioned whether the relative financial strength of the parties is relevant to whether an 

award of fees is warranted. Order Denying Pet. at 6. Regardless, there is insufficient information about the 

parties’ relative financial strength for this factor to weigh in either direction. 

 117 2 F.M.C.2d 2 F.M.C.2d
FEDERAL MARITIME COMMISSION

Office of Administrative Law Judges

EARLEAN EDWARDS DUKART, Complainant

v. 

OCEAN STAR INTERNATIONAL INC., D/B/A INTERNATIONAL 

VAN LINES, Respondent. 

DOCKET NO. 20-03 

Served: July 10, 2020 

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

INITIAL DECISION GRANTING VOLUNTARY DISMISSAL1

[Notice Not to Review served 8/11/2020, decision administratively final.]

I. Introduction

This proceeding arises from a complaint filed with the Federal Maritime Commission 

(“FMC” or “Commission”) in connection with a dispute over a contract to ship household goods 

from the United States to Belize. Complainant, Earlean Edward Dukart (“ED”), who is pro se

and representing herself, alleges that Respondent, Ocean Star International Inc. (“Ocean Star”),

doing business as International Van Lines, violated sixteen sections of the Shipping Act of 1984, 

as amended (“Shipping Act”). 

According to the complaint, Complainant, who was relocating from the United States to 

Belize, entered into a contract with Ocean Star to ship her household goods by 40 foot container 

from Denver, Colorado, to Consejo Shores, Belize, for $17,424. Complainant paid Ocean Star a 

deposit of $3,000 as part of the agreement. Respondent’s agent packed, loaded, and transported 

the shipment to a storage facility to wait for transportation to Belize. Complainant was unhappy 

with Ocean Star’s performance during and after pickup of the household goods and subsequently 

canceled the contract with Ocean Star. Ocean Star demanded that Complainant pay them for 

services rendered before the household goods could be released and eventually Complainant paid 

Ocean Star an additional $2,746 to secure release of her belongings. When Complainant took 

possession of the shipment, she alleges that many of her items were damaged or missing. 

Complaint at 2-36. 

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.

 118 2 F.M.C.2d 2 F.M.C.2d
Complainant alleges that Respondent violated 46 U.S.C §§ 41102(a),(b),(c); 41103(a); 

411042(a)(1), (2)(A), (3), (4)(A), (4)(D), (4)(E), (5), (8), (10); and 41105(1), (2), (4) of the 

Shipping Act. Complaint at 2. Complainant contends that the Commission has jurisdiction over 

the complaint pursuant to 46 U.S.C. § 41301 because she suffered injury as a result of 

Respondent’s violation of the Shipping Act and because her dispute falls under the Carriage of 

Goods by Seas Act (“COGSA”). Complaint at 2. Complainant requests reparations in the amount 

of $256,241 for lost income, related consequential and incidental damages, actual loss and 

damage of the shipment, pain and suffering, mental anguish and duress, damage/loss of 

consortium and associated medical expenses, and punitive damages. Complaint at 38-39. In 

addition, Complainant requests that the Commission order Respondent to cease and desist from 

violating the Shipping Act. Complaint at 39. 

Ocean Star denied the allegations, asserting in a letter to the Commission in response to 

the complaint that the shipment was “not an overseas shipment handled by our company,” and 

asked that the complaint be dismissed. Answer/Motion at 2. In response, on March 2, 2020, 

Complainant filed a document labeled “Response to Respondent’s motion” (“Complainant’s 

Response”).

On March 30, 2020, an order was served, observing that while pro se Respondent had not 

filed a motion, its answer could be viewed as a motion to dismiss. Order to Brief Motion to 

Dismiss at 1. The order stated:

It seems most efficient at this point to treat Respondent’s answer as a motion to 

dismiss and Complainant’s response as a response to the motion. However, the 

parties will be provided an opportunity to file any additional legal or factual 

arguments and any other exhibits that they would like to be considered regarding 

the request to dismiss the complaint. The parties should review the issues raised in 

the initial order and should address whether insurance was purchased for the 

shipment and whether a claim has been made against the insurance or bond on file 

with the Federal Maritime Commission. 

Order to Brief Motion to Dismiss at 1.

On April 14, 2020, Respondent’s new counsel filed a supplemental memorandum in 

support of motion to dismiss (“Supplemental Motion”). On the same day, pro se Complainant 

filed a document labeled “Status Report” with exhibits attached, in which Complainant 

addressed statements made in Respondent’s answer/motion, recounted challenges impeding her 

efforts to comply with the orders and to litigate this proceeding, and requested “a continuation of 

these proceedings.” Complainant’s Status Report at 1-3. 

On April 16, 2020, an Order Granting Extension to Respond to Motion to Dismiss 

(“Order Granting Extension”) was issued in response to Complainant’s status report, stating in 

part: 

2 Complainant incorrectly cites the section 41104 provisions as sections 41104(1), 41104(2)(a), 

41104(3), 41104(4)(a)(d)(e), 41104(5), 41104(8) and 41104(10). The correct citations are 41104(a)(1), 

(2)(A), (3), (4)(A), (4)(D), (4)(E), (5), (8), (10).

 119 2 F.M.C.2d 2 F.M.C.2d
It appears that Complainant’s request to continue the proceedings means that she 

wants the proceeding to continue (not be dismissed) although it could also be read 

as a request for an extension of time to respond to the motion. In an abundance of 

caution, Complainant will be granted a short extension of time to file any 

additional response to the motion to dismiss and supplemental memorandum in 

support of the motion to dismiss. After this motion is resolved, if the proceeding 

is not dismissed, a schedule will be issued with time for discovery and briefing of 

the proceeding. Complainant must file a supplemental response, if any, to the 

motion to dismiss by April 27, 2020. 

Order Granting Extension at 1-2. 

On April 27, 2020, Complainant filed her supplemental response, arguing that the 

Commission has jurisdiction over her complaint and attaching booking confirmations as 

evidence in support of her contention. In addition, Complainant stated: 

As a full understanding of this matter could not be established within the allotted 

time frame, Complainant would like to withdraw the current complaint, 

preventing dismissal, to leave open the opportunity to pursue the matter under the 

proper jurisdiction unless continuation is deemed appropriate and ordered 

otherwise.

Complainant’s Supplemental Response at 1. A request for withdrawal would be considered 

under Commission Rule 72(a), which addresses voluntary dismissals. 46 C.F.R. § 502.72(a). It 

appears that if Respondent’s motion to dismiss is denied, then Complainant would like the case 

to continue, so the request for withdrawal is conditioned on the outcome of the motion. Because 

the request was filed after service of the answer/motion and is not a stipulation, it is considered 

under Rule 72(a)(3), which provides in pertinent part that “an action may be dismissed at the 

complainant’s request only by order of the presiding officer, on terms the presiding officer 

considers proper.” 

For the reasons set forth below, the Commission has personal and subject matter 

jurisdiction to adjudicate the Shipping Act violations alleged. However, as discussed below, this

complaint is subject to dismissal because it does not state a plausible claim for relief under the 

Shipping Act. Some of the allegations made by Complainant are not Shipping Act claims that 

can be adjudicated by the Commission. No finding is made as to the allegations of non-Shipping 

Act violations. If the motion to dismiss were granted, the dismissal would be without prejudice

to provide Complainant an opportunity to consider whether the defects could be cured. In 

deference to Complainant’s request, voluntary dismissal without prejudice is granted instead. 

 120 2 F.M.C.2d 2 F.M.C.2d
II. Arguments of the Parties

Ocean Star seeks a dismissal with prejudice. Ocean Star avers that it “parted ways with 

ED in July 2018, and did NOT handle an overseas shipment to Belize for ED, but instead

released it to another carrier of ED’s choosing.” Answer/Motion at 1. Ocean Star maintains that 

at most it “began a business undertaking for Complainant that may have required Ocean Star, at 

some future date, to act in its capacity as an OTI.” Supplemental Motion at 2. Ocean Star avers 

that it “never actually arranged ocean transportation, made a booking, issued a house bill of 

lading, or provided any other regulated services for the Complainant.” Supplemental Motion at 3. 

Ocean Star asserts that Complainant’s claims must be dismissed for lack of personal 

jurisdiction because the Commission has personal jurisdiction limited only to certain parties 

involved in oceanborne commerce; Ocean Star did not engage in activities regulated by the 

Shipping Act; and, Complainant “fails to provide affirmative facts showing that the Commission 

has personal jurisdiction over Ocean Star.” Supplemental Motion at 6-11. Ocean Star argues that 

even “construing the facts in the most generous light to Complainant, the only services that 

Ocean Star arguably provided in this case was that of an inland freight broker, when the 

company arranged for the packing, transportation, and storage of the Complainant’s goods in 

Colorado.” Supplemental Motion at 10. 

Ocean Star further asserts that Complainant’s claims must be dismissed for lack of 

subject matter jurisdiction. Ocean Star contends that the Commission lacks subject matter 

jurisdiction over any claims in the complaint that invoke COGSA or breach of contract as a basis 

for jurisdiction as those claims are not violations of the Shipping Act, noting that the 

Commission’s jurisdiction is limited to violations of the Shipping Act. Supplemental Motion at 

3. Ocean Star further asserts that it was not acting as a common carrier for this shipment. 

Supplemental Motion at 16-17. 

Ocean Star states that an “entirely independent and distinct grounds for dismissal is that 

Complainant’s complaint does not plausibly allege facts constituting any violation or violations 

of the Shipping Act” and therefore Complainant fails to plausibly allege facts constituting a 

violation of the Shipping Act. Supplemental Motion at 17-26. 

Complainant contends that the Commission has subject matter jurisdiction because her 

dispute falls under COGSA as well as the Shipping Act pursuant to 46 U.S.C. § 41301 because 

she suffered injury as a result of Respondent’s violation of the Shipping Act. Complaint at 2. 

Complainant states that “[Respondent] and entities are obligated to comply with all applicable 

rules and regulations of the FMC, including the Shipping Act and COGSA.” Complaint at 2.

In response to Respondent’s argument that it did not act as an OTI, Complainant observes 

that the “submitted contract entered was to ship household goods from Denver to Belize, not a 

haphazard relocation to rodent infested storage 18 miles away.” Complainant’s Supplemental 

Response at 1. Complainant asserts that the booking confirmations she received from 

Respondent are evidence that the parties entered into an overseas shipping contract. 

Complainant’s Supplemental Response at 1. Complainant also requests to withdraw the 

complaint. Complainant’s Supplemental Response at 1. 

 121 2 F.M.C.2d 2 F.M.C.2d
III. Analysis 

A. Motion to Dismiss Standard

Although the Commission’s Rules of Practice and Procedure (“Rules”) do not explicitly 

provide for motions to dismiss, Rule 12 of the Commission’s Rules states that the Federal Rules 

of Civil Procedure 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. “In evaluating whether a complaint before the Commission states a 

cognizable claim under the Shipping Act, the Commission has relied on Federal Rules of Civil 

Procedure 12(b)(6) and the federal case-law interpreting it.” Cornell v. Princess Cruise Lines, 

Ltd., 33 S.R.R. 614, 620 (FMC 2014) (citing Mitsui O.S.K. Lines Ltd. v. Global Link Logistics, 

Inc., 32 S.R.R. 126, 136 (FMC 2011)). 

Federal Rule of Civil Procedure 12(b) permits a party to raise, by motion, lack of subject 

matter jurisdiction (12(b)(1)), lack of personal jurisdiction (12(b)(2)), and failure to state a claim 

(12(b)(6)). F.R.C.P. 12; see also Mitsui O.S.K. Lines Ltd., 32 S.R.R. at 136. “Proper jurisdiction 

for a federal court is fundamental and necessary before touching the substantive claims of a 

lawsuit.” Arena v. Graybar Elec. Co., Inc., 669 F.3d 214, 223 (5th Cir. 2012). The “party 

asserting subject-matter jurisdiction, has the burden of proving its existence by a preponderance 

of the evidence.” Garanti Finansal Kiralama A.S. v. Aqua Marine & Trading, Inc., 697 F.3d 59, 

65 (2d Cir. 2012). 

At this stage, “Rule 12(b)(6) does not require ‘the pleading of specific evidence or extra 

facts beyond what is needed to make the claim plausible.’” Maher Terminals, LLC v. The Port 

Authority of New York and New Jersey, 34 S.R.R. 35, 58 (FMC 2015) (quoting Arista Records 

LLC v. Doe 3, 604 F.3d 110, 120-21 (2d Cir. 2010)). Instead, the “complaint’s factual allegations 

‘must be enough to raise a right to relief above the speculative level’ and must ‘nudge claims 

across the line from conceivable to plausible.’” Maher, 34 S.R.R. at 57-58 (quoting Cornell, 33 

S.R.R. at 620). However, “[m]ere labels and conclusions or a ‘formulaic recitation of the 

elements of a cause of action’ will not suffice, nor will ‘naked assertions devoid of further 

factual enhancement.’” Maher, 34 S.R.R. at 58. The Commission explained: 

To survive motions to dismiss for failure to state a claim under Rule 12(b)(6), a 

complaint must contain sufficient factual matter, accepted as true, to “state a 

claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 

U.S. 544, 570 (2007). A claim “has facial plausibility when the plaintiff pleads 

factual content that allows the court to draw the reasonable inference that the 

defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, [556 U.S. 662, 

678] (2009). 

Mitsui O.S.K. Lines Ltd., 32 S.R.R. at 136. 

“A pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation of the elements 

of a cause of action will not do.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). 

“When there are well-pleaded factual allegations, a court should assume their veracity and then 

 122 2 F.M.C.2d 2 F.M.C.2d
determine whether they plausibly give rise to an entitlement to relief.” Iqbal, 556 U.S. at 678. 

The Commission explained: 

Courts also construe the factual allegations in the complaint in the light most 

favorable to the plaintiff and must grant the plaintiff the benefit of all inferences 

that can be derived from the facts as alleged in the complaint. The Commission 

need not, however, accept any inferences drawn by Complainants that are 

unsupported by the facts pleaded in the complaint. Moreover, the Commission 

need not “accept legal conclusions cast in the form of factual allegations.”

Cornell, 33 S.R.R. at 620-621 (citations omitted). The Commission has clearly indicated that 

federal case law interpreting Federal Rule of Civil Procedure 12(b)(6), including Twombly and 

Iqbal, continues to apply to motions to dismiss filed in Commission proceedings. Maher, 34 

S.R.R. at 55; Cornell, 33 S.R.R. at 620; Mitsui O.S.K. Lines Ltd., 32 S.R.R. at 136. 

B. Discussion

As caselaw provides, before proceeding to the merits of Complainant’s allegations, it is 

first necessary to resolve the question of whether the Commission has jurisdiction to adjudicate

this complaint. See, e.g., Arena. 669 F.3d at 223-224 (stating that proper jurisdiction is necessary 

before touching the substantive claims of a case). The party asserting jurisdiction bears the 

burden to show that jurisdiction is present. See, e.g., Garanti Finansal, 697 F.3d at 65. 

1. The Commission has Jurisdiction to Adjudicate this Complaint

Ocean Star posits that the Commission lacks jurisdiction over it because it did not act in 

the capacity of a regulated entity and that at most, it “began a business undertaking for 

Complainant that may have required Ocean Star, at some future date, to act in its capacity as an 

OTI.” Supplemental Motion at 2. Complainant points to the contract between the parties as 

evidence that Respondent entered into an agreement with her to ship household goods from 

Denver to Belize. Complainant’s Response at 1.

The Shipping Act provides inter alia, that a “person may file with the . . . 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., 30 S.R.R. 991, 997-99 (FMC 2006); see also Cargo One, Inc. v. 

Cosco Container Lines Co., Ltd., 28 S.R.R. 1635, 1645 (FMC 2000). 

Moreover, Respondent is a common carrier licensed to provide non-vessel operating 

common carrier (“NVOCC”) services and is thus subject to the jurisdiction of the Commission 

with regard to its activities related to ocean transportation between the United States and a 

foreign destination. 

The Commission has jurisdiction over matters relating to transportation by water of 

cargo between the United States and a foreign country by a common carrier. That jurisdiction 

begins when a common carrier assumes responsibility for transportation of the cargo and ends 

when the cargo is delivered to the consignee at the place of destination contemplated by the 

 123 2 F.M.C.2d 2 F.M.C.2d
contract of carriage. See, e.g., Norfolk Southern Ry. v. James N. Kirby, Pty Ltd., 543 U.S. 14, 

23-27 (2004) (finding that federal maritime law applies to the inland portions of 

international shipments transported under a through bill of lading). See also, Kawasaki 

Kisen Kaisha, Ltd. v. Regal-Beloit Corp., 561 U.S. 89, 108 (2010) (finding that ocean

transportation occurring under a through bill of lading cannot be separated into ocean and

domestic inland transportation); accord, Mitsui O.S.K. Lines Ltd. v. Global Link Logistics, 

32 S.R.R. 126, 2011 FMC LEXIS 12, 56 (“legislative history demonstrates that Congress 

intended that the Commission have jurisdiction over through transportation, including the 

inland segment of such transportation”). 

Respondent’s argument that it began a business undertaking for Complainant that merely 

required Respondent to act in its capacity as an OTI at some future date is not persuasive. See

Supplemental Motion at 2. The characterization of transportation as a through movement to the 

ultimate destination is reached by looking at “the original and persisting intention of the shippers 

which was carried out.” Baltimore & O.S. W.R. Co v. Settle, 260 U.S. 166 (1922). As the 

Commission has stated, “the intention of the shipper as to the ultimate destination at the time the 

cargo starts is the test of its character, though broken, transported by more than one carrier, or 

moving on through or local bills of lading.” Matson Navigation Co., Inc.–Transport. of Cargoes 

Between Ports and Points Outside Haw. and Islands Within the St. of Haw., 24 S.R.R. 979, 988 

(1988) (quoting Intercoastal Investigation, 1935, 1 U.S.S.B.B. 400, 440 (1935)). 

Recently, in Crocus, the Commission vacated the dismissal of a section 41102(c) claim

for lack of jurisdiction because the complainant, which had initially entered into an agreement to 

ship a Formula boat from the United States to Dubai, subsequently asked that the boat be shipped 

to Florida instead. Crocus Investments, LLC v. Marine Transport Logistics, Inc., 1 F.M.C.2d 403 

(FMC 2019). The Commission stated: 

The relevant inquiry here is not, however, limited to whether there was a contract 

for overseas shipment. Nor was the ALJ’s focus on whether the Formula left the 

United States or had an agreement for overseas shipment clearly linked to the 

Shipping Act or precedent, and it unduly narrows the scope of the inquiry to two 

factors. The approach supported by the text of § 41102(c) and Commission 

caselaw asks: was the respondent acting as a regulated entity with respect to the 

conduct at issue? 

The inquiry here should have been: was Marine Transport acting as an OTI with 

respect to the Formula boat from August 2013 (when it was purchased) to 

February 2014 (when Crocus began to inquire about domestic transportation of 

the boat). This fact-intensive analysis takes into account the statutory definition of 

OTI (and in particular, NVOCC), and evidence about the parties’ conduct during 

that time frame.

Whether the Formula was actually transported to a foreign port or the subject of a 

contract to do so are highly relevant to this analysis, but not necessarily 

determinative. For instance, the Commission has determined that a broad swath of 

conduct falls within the scope of NVOCC activities.

 124 2 F.M.C.2d 2 F.M.C.2d
Crocus, 1 F.M.C.2d at 415 (internal citations omitted). 

The Commission has long relied on three factors – holding itself out, assuming 

responsibility, and transportation by water – to identify a common carrier:

As a “common carrier” is defined in the Shipping Act, an NVOCC “holds out” to 

the “general public to provide transportation by water” and “assumes responsibility 

for the transportation from the port or point of receipt to the port or point of 

destination.” 46 U.S.C. §1702([7]). The Commission has found that no single factor 

of an entity’s operation is determinative of its status as a common carrier. [River 

Parishes Co., Inc. v. Ormet Primary Aluminum Corp., 28 S.R.R. 751, 763 (FMC 

1999); Activities, Tariff Filing Practices and Carrier Status of Containerships, Inc., 

9 F.M.C. 56, 62-65 (FMC 1965)]. Rather, the Commission must evaluate the indicia 

of common carriage on a case-by-case basis. Id.

Rose Int’l, Inc. v. Overseas Moving Network Int’l, Ltd., 29 S.R.R. 119, 162 (FMC 2001). 

Here, Complainant alleges that the parties entered into an agreement for Respondent to 

ship Complainant’s household goods from the United States to Belize. In furtherance of that 

agreement, Complainant paid a deposit to Respondent and Respondent packed, loaded, and 

transported the shipment to a storage facility while waiting for a shipping container for 

transportation to Belize. Therefore, substantial efforts were made towards completion of this 

arrangement for international oceanborne transportation. The fact that Complainant became

dissatisfied with Respondent’s performance and terminated the contract before Respondent could 

complete the transportation does not nullify the fact that the intention of the parties at the time of 

the agreement was for Respondent to provide international ocean transportation from the United 

States to Belize. The facts alleged are sufficient to support the allegation that Respondent acted 

as an NVOCC for this shipment until Complainant terminated its services. Accordingly, the 

complaint plausibly alleges that the Commission has personal jurisdiction to adjudicate the 

Shipping Act claims alleged in this complaint.

2. The Commission has no Authority to Adjudicate Contract, Tort, and 

COGSA Claims

Complainant filed this complaint pursuant to 46 U.S.C. § 41301, which allows any 

person to file a sworn complaint alleging a violation of the Shipping Act and to seek reparations 

within three years of the occurrence of the violation for actual injury resulting from the violation.

Complainant alleges that she suffered injury as a result of Respondent’s violation of 

certain enumerated sections of the Shipping Act. Complaint at 2. Complainant asserts that “this 

matter relates to the contracts for carriage of goods by sea from ports of the United States, and 

thus comes under . . . COGSA, 46 U.S.C. § 30701.” Complaint at 2. Complainant further asserts

that “Respondent’s failure to maintain contractual obligations along with breach of contract, 

fraud, forgery, deceptive trade practice, gross negligence and intentional misconduct . . . caused 

damages/losses to the Complainant.” Complaint at 38.

Respondent argues that “Complainant has improperly sought to recast common law state 

contract and tort claims as violations of federal law” and that “the FMC lacks subject matter 

 125 2 F.M.C.2d 2 F.M.C.2d
jurisdiction over any and all claims in the complaint which invoke COGSA as a basis for 

jurisdiction as well as any and all claims in the complaint which allege pure breach of contract 

which are not violations of the Shipping Act.” Supplemental Motion at 1, 3. 

Pursuant to COGSA, jurisdiction over loss and damage claims arising from transportation 

by ocean is vested in the federal district courts. Nat’l Auto. Publ’n, Inc. v. U. S. Lines, Inc., 486 

F.Supp. 1094, 1099 (S.D.N.Y. 1980). 

Further, the Commission has no authority to hear Complainant’s claims alleging failure 

to maintain contractual obligations, breach of contract, fraud, deceptive trade practice, gross 

negligence, and intentional misconduct. As has been long articulated in the Commission’s 

caselaw:

[The] Commission does not exercise the authority of a court of law or of equity. 

We administer and enforce the requirements of the Shipping Act and related Acts. 

When pleadings come before us in which violations of the Act are heavily veiled 

in common law pleadings it becomes difficult to distill the activities alleged to be 

in violation of the Act from those which indicate the possible violations of some 

common law obligation.

European Trade Specialists, Inc. v. Prudential-Grace Lines, Inc., 19 F.M.C. 148, 151 (FMC 

1976). See also Western Overseas Trade and Dev. Corp. v. ANERA, 26 S.R.R. 874, 884 (FMC 

1994) (stating that the Shipping Act prevents the Commission from “hearing those claims, which 

although couched in terms of alleged violations of the 1984 Act, seek remedies that would 

otherwise be available in a breach of contract action if the matter were brought before a court.”).

Accordingly, only claims based on the Shipping Act can be adjudicated by the Commission. 

3. Complainant Does Not State a Claim for Relief under the Shipping Act

Respondent asserts as an independent basis for dismissal that “Complainant also fails to 

allege facts that would constitute violations of the Shipping Act.” Supplemental Motion at 17. 

Complainant does not appear to directly address this portion of the motion to dismiss. 

For a number of the complaint’s allegations, Complainant misunderstands legal terms, 

including the types of contracts and relationships necessary to establish a Shipping Act violation. 

In addition, because a “pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation of 

the elements of a cause of action will not do” (Iqbal, 556 U.S. at 678), where the Complainant 

simply recites the Shipping Act sections she alleges Respondent violated, without alleging actual 

conduct by Respondent corresponding to the conduct proscribed by those sections, her Shipping 

Act claims fail to state a plausible claim for relief under the Shipping Act. A claim “has facial 

plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable 

inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. As 

explained more fully below, Complainant’s sixteen Shipping Act claims could be dismissed for 

failure to state a claim for relief. 

 126 2 F.M.C.2d 2 F.M.C.2d
a. Section 41102(a) 

Although Complainant’s arguments are not always entirely clear, in the complaint, she 

appears to focus on the agreement and rates charged to her by Respondent, arguing: 

(1) as Respondents were incapable of executing service provisions, solicitation of 

the Service Contract itself is an attempt to obtain ocean transport for property at less 

than rates that would otherwise apply; Respondents method of execution required 

intermediate movers and storage that were excluded when negotiating the 

agreement.

(2) based on internal invoices and incriminating correspondence, lower rates 

previously presented by Respondents attempted to obtain transportation contract at 

rates they later confirm to have been lower than what was applicable, Respondents 

additionally imposed other unlisted charges, stated to apply, as they extorted unjust 

charges and fees for cancellation

(3) improper classification of merchandise being transported, inaccurate or 

unavailable inventory listing, an accurate Bill of Lading was not generated 

(4) false measurements were presented to obtain transport, Respondents 

subcontracted with Cobra Van Lines represented by Jesse Larrea, under false 

pretenses; Mr. Larrea arrived with a copy of the Service Contract that had service 

lines omitted. Mr. Larrea stated that his company was contacted for a simple load 

and delivery to storage 

(5) unfairly and unjustly, the subcontractor obligations were falsely reported; three 

men and a 26 ft. truck were inadequate, materials for wrapping and packing were 

not available, this did not coincide with services contracted for; accessibility for a 

40' container was not even possible for future loading, neither multiple moves nor 

storage were discussed or agreed upon. 

Complaint at 36-37. Although the complaint as a whole is long and detailed, other sections 

including the detailed chronological statement of facts does not further clarify the argument.

Respondent contends: 

Complainant’s arguments evidently center around Ocean Star’s estimate for 

charges provided to the Complainant and additional charges for packing, inland 

moving and storage fees, which were allegedly subsequently revised by Ocean Star

from the original estimate. See Compl. Section IV.A.1(a). Complainant’s 

assertions are a clear misunderstanding of 46 U.S.C. § 41102(a), which prohibits 

persons from obtaining ocean transportation for property at less than the rates or 

charges that would otherwise apply. There are no facts alleged to indicate that 

Ocean Star was attempting to “obtain or attempt to obtain ocean transportation for 

property at less than the rates or charges that would otherwise apply” from a 

NVOCC or an ocean common carrier. 

Supplemental Motion at 17-18. 

Section 41102(a) states:

 127 2 F.M.C.2d 2 F.M.C.2d
A person may not knowingly and willfully, directly or indirectly, by means of 

false billing, false classification, false weighing, false report of weight, false 

measurement, or any other unjust or unfair device or means, obtain or attempt to 

obtain ocean transportation for property at less than the rates or charges that 

would otherwise apply. 

46 U.S.C. § 41102(a). The Commission has clarified in its Rules that:

An essential element of the offense is use of an “unjust or unfair device or 

means.” In the absence of evidence of bad faith or deceit, the . . . Commission 

will not infer an “unjust or unfair device or means” from the failure of a shipper to 

pay ocean freight. An “unjust or unfair device or means” could be inferred where 

a shipper, in bad faith, induced the carrier to relinquish its possessory lien on the 

cargo and to transport the cargo without prepayment by the shipper of the 

applicable freight charges.

46 C.F.R. § 545.2. 

Complainant does not allege that through an unjust or unfair device or means Respondent 

obtained or tried to obtain ocean transportation for property at less than the rates or charges that 

would normally apply for the ocean transportation. Rather, the complaint identifies problems 

with the initial estimate, the failure to provide all of the services promised, unpreparedness and 

lack of competence of the movers, conflicts between what Complainant ordered and what the 

movers provided, discrepancies in the inventory list of household items, failure to bring a large 

enough truck or enough movers, and other problems with the execution of the pickup of goods. 

Complaint at 6-15. 

The initial estimate was for a flat rate fee. Scheduling issues led to an inability to pack 

and ship the household goods overseas in the short timeframe available. Therefore, Complainant 

reluctantly agreed to move the items into storage. Complaint at 5-7. Eventually, Complainant 

cancelled the agreement and Respondent charged a lower fee for services rendered. Complaint at 

13-19. The Respondent did not transport the cargo overseas and no bill of lading was issued. 

Although the Complainant alleges significant problems with the shipment, the problems are not 

related to obtaining ocean transportation at lower rates than would normally apply. Indeed, it 

appears that Complainant believes she was overcharged for the services provided. 

Because Respondent did not ship the cargo overseas, no bill of lading was generated, and 

it did not obtain ocean transportation for the shipment. Complainant does not allege what rates 

should have been paid by Respondent for ocean transportation as opposed to what rates were

paid (and could not, as the relationship ended prior to that point). Thus, the complaint does not 

allege sufficient factual matter to state a plausible section 41102(a) claim.

b. Section 41102(b) 

Complainant alleges that section 41102(b) was violated because “(1) services that were 

executed were not in accordance to the original Service Contract, nor the second altered version 

presented by the subcontractor (2) second contract is a violation by [its] existence; omissions, 

 128 2 F.M.C.2d 2 F.M.C.2d
deletions and changes of service provisions are not in accordance to the Service Contract.” 

Complaint at 37.

Respondent asserts that:

Even construing Complainant’s factual allegations in the most sympathetic light, 

not only did Ocean Star not operate as a common carrier, but Ocean Star did not 

operate under any agreements required to be filed under section 40302 or 40305 

of the Shipping Act. In her arguments, Complainant appears to reference a 

contractual agreement between the parties as evidence of a violation, which she 

incorrectly refers to as a “Service Contract.” See Compl. Section IV.A.1(b). Yet 

the “agreements” cited in § 41102(b) are ocean common carrier agreements and 

MTO agreements, and the Complaint fails to provide any factual basis to allege a 

violation of the same.

Supplemental Motion at 18-19. 

Although pro se Complainant entered into an agreement with Ocean Star, that agreement

was not a service contract as defined by the Shipping Act. 

The term “service contract” means a written contract, other than a bill of lading or 

receipt, between one or more shippers, on the one hand, and an individual ocean 

common carrier or an agreement between or among ocean common carriers, on 

the other, in which – (A) the shipper or shippers commit to providing a certain 

volume or portion of cargo over a fixed time period; and (B) the ocean common 

carrier or the agreement commits to a certain rate or rate schedule and a defined 

service level, such as assured space, transit time, port rotation, or similar service 

features.

46 U.S.C. § 40102(21). 

Section 41102(b) provides that a “person may not operate under an agreement required to 

be filed under section 40302 or 40305.” 46 U.S.C. § 41102(b). Sections 40302 and 40305 govern 

agreements “between or among ocean common carriers,” “between or among marine terminal 

operators, or between or among one or more marine terminal operators and one or more ocean 

common carriers,” and assessment agreements. See 46 U.S.C. § 40301. Neither Complainant nor 

Respondent is an ocean common carrier (vessel-operating-common carrier) or marine terminal 

operator. See 46 U.S.C. § 40102(18). The service contract referred to in this section is not the 

contract between individual consumers and NVOCC for a specific shipment but rather the 

contract between common carriers. Therefore, the provisions of section 41102(b) do not apply to 

the parties. Complainant’s section 41102(b) allegation thus does not state a plausible claim for 

relief. 

c. Section 41102(c) 

Complainant asserts a violation of section 41102(c) based on: “(a) storage was neither 

desired nor contracted (b) property was severely mishandled by subcontractors that were no 

more than three men and a rental truck (c) items were improperly stored at a public storage 

 129 2 F.M.C.2d 2 F.M.C.2d
facility in a shared space resulting in damages and loss of property (d) property not delivered; 

Complainant retrieval was demanded.” Complaint at 37. 

Respondent contends:

Complainant has not presented any facts that indicate that Ocean Star’s alleged

conduct was “normal, customary, often repeated, systematic, uniform, habitual, 

and continuous.” Instead, the Complaint describes a single nexus of events

between Complainant and Ocean Star. Moreover, the Complainant’s lengthy 

recounting of alleged facts about storage and handling issues focus on deficient 

storage and handling practices of the third-parties, not the conduct of Ocean Star. 

See Compl. Section IV.A.1(c). 

Supplemental Motion at 19. 

Section 41102(c) provides that a “common carrier, ocean transportation intermediary or 

marine terminal operator may not fail to establish, observe and enforce just and reasonable 

regulations and practices relating to or connected with receiving, handling, storing, or delivering 

property.” 46 U.S.C. § 41102(c). 

One of the required elements under section 41102(c) is that “[t]he claimed acts or 

omissions of the regulated entity are occurring on a normal, customary, and continuous basis.” 

See 46 C.F.R. § 545.4. Complainant does not allege, and there is nothing in the record to suggest, 

that any of the alleged acts by Respondent are “occurring on a normal, customary, and 

continuous basis,” as opposed to something that occurred solely on this shipment, so this element 

is not met. More information would be needed to adjudicate the other elements, such as whether 

the conduct was unreasonable. Accordingly, Complainant’s section 41102(c) claim does not state 

a plausible claim for relief.

d. Section 41103(a) 

Complainant asserts:

(a) upon mandate for property retrieval, Respondents demanded coordination with 

a professional team, this information was utilized detrimentally preventing 

transportation via a different company. i) dates are “scheduled” without 

coordination or communication with ED ii) failure to appear to release items on 

more than one scheduled date iii) false invoices are submitted, payment options are 

change[d], policies regarding release are altered creating undue delays (1) ACH 

payment for deposit was made on 4.30.2018, it cleared and was accepted on 

5.1.2108 to commence scheduling services to be rendered; the cancellation ransom 

ACH submitted pended 5 to 7 days to clear. iv) failed to advise they were using 

public storage that could not accommodate access for a 40' container demanding 

extra services for release and loading. 

Complaint at 37.

Respondent alleges:

 130 2 F.M.C.2d 2 F.M.C.2d
While it is patently unclear what exactly the Complainant is alleging, these

allegations generally appear to relate to scheduling issues, alleged changes in

payment options and invoices, and the alleged failure to advise the Complainant of

the ownership of warehouse facilities. None of these allegations relate to the

improper disclosure or receipt of information by Ocean Star, as a violation of 

§ 41103(a)(1) would require. Further, it remains entirely unclear and implausible 

how Ocean Star requesting coordination with its employees, and/or with the

transportation companies with which it has arranged freight, would disclose 

information “used to the detriment or prejudice of the shipper.”

Supplemental Motion at 20 (citation omitted).

Section 41103(a)(1) states that: 

(a) A common carrier, marine terminal operator or ocean freight forwarder either 

alone or in conjunction with any other person, directly or indirectly, may not 

knowingly disclose, offer, solicit, or receive any information concerning the 

nature, kind, quantity, destination, consignee, or routing of any property tendered 

or delivered to a common carrier, without the consent of the shipper or consignee, 

if the information – (1) may be used to the detriment or prejudice of the shipper, 

the consignee, or any common carrier; 

46 U.S.C. § 41103(a)(1). 

Successful ocean shipments require coordination with employees, agents, and 

contractors. There are no allegations here that there was information disclosed to Complainant’s 

competitor or someone who might reasonably be expected to act to the detriment or prejudice of 

Complainant. Indeed, in reading the complaint, the lack of coordination between the 

Respondent’s local movers, storage facility, and new movers appears to be one of the concerns. 

The objection, here, seems to focus on the handling of the shipment, not the sharing of 

information. Complainant’s section 41103(a)(1) claim thus does not state a plausible claim for 

relief. 

e. Section 41104 

Complainant merely recites the provisions of the nine section 41104 allegations, for 

example by stating that “allow[ing] a person to obtain property transportation at less than 

established rates by means of false billing, classification, weighing, measurement or any unfair 

or unjust means. All were violated to obtain contractual agreements with ED as well as 

respective subcontractors.” Complaint at 37-38. 

Respondent asserts that “Ocean Star did not arrange for ocean transportation at all with 

respect to Complainant;” “Ocean Star did not act in the capacity as a common carrier, provide 

ocean transportation, or charge the Complainant any ocean freight at all;” “Ocean Star’s attempts

to provide services to Complainant were delayed repeatedly by Complainant’s own delays and 

failure to coordinate;” and that there are no allegations that Ocean Star violated the cited 

provisions. Supplemental Motion at 21-22. 

 131 2 F.M.C.2d 2 F.M.C.2d
Section 41104 governs operations by common carriers. The section 41104 provisions 

Complainant alleges Respondent violated provide as follows: 

(a) A common carrier, either alone or in conjunction with any other person, 

directly or indirectly, may not – 

(1) allow a person to obtain transportation for property at less than the 

rates or charges established by the carrier in its tariff or service contract by 

means of false billing, false classification, false weighing, false 

measurement, or any other unjust or unfair device or means;

(2) provide service in the liner trade that is – 

(A) not in accordance with the rates, charges, classifications, rules, and 

practices contained in a tariff published or a service contract entered into 

under chapter 405 of this title; . . . 

(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; 

(4) for service pursuant to a tariff, engage in any unfair or unjustly 

discriminatory practice in the matter of – 

(A) rates or charges; . . . 

(D) loading and landing of freight; or 

(E) adjustment and settlement of claims; 

(5) for service pursuant to a service contract, engage in any unfair or 

unjustly discriminatory practice in the matter of rates or charges with 

respect to any port; . . . 

(8) for service pursuant to a tariff, give any undue or unreasonable 

preference or advantage or impose any undue or unreasonable prejudice or 

disadvantage; . . . 

(10) Unreasonably refuse to deal or negotiate. 

46 U.S.C. § 41104. 

Complainant provides a formulaic recitation of the elements of these 41104 sections but

does not identify specific conduct by Respondent that violated the sections, except for allegations 

of a failure to deal or communicate. However, it is clear from the detailed complaint that there 

was fairly regular communication, including many misunderstandings and missed calls, but not a 

refusal to deal. 

As an example, in the chronological recitation of facts, Complainant alleges that 

Respondent “failed to communicate in any manner.” Complaint at 14. However, the complaint 

also outlines many and continuing instances of communication, for example that she “is 

 132 2 F.M.C.2d 2 F.M.C.2d
ultimately connected to someone identified as the department supervisor,” and a few days later

“many exchanges ensue.” Complaint at 14, 16. At another point, Complainant states that she

“abruptly terminates the exchange” and “refuses to communicate outside of written word at this 

point” although “[e]mail exchanges begin again.” Complaint at 19. This does not demonstrate a 

failure to communicate but rather unhappiness with the means of communication and the content 

of communication. 

As another example, the parties talk past each other when Complainant is seeking the 

return of her goods and Respondent is seeking payment. Complainant reports that on June 20, 

2018, Respondent’s representative indicates that “[w]e have been trying to call you and it goes 

straight to voicemail. Please confirm you are paying the invoice. Once payment is received we 

can orchestrate a time & date to meet at the storage unit.” Complaint at 19. Complainant asserts 

that “attempts to communicate, deal or negotiate are refused.” Complaint at 19. However, 

Complainant then states that she received correspondence from Respondent asking if she had 

made payment and the following day Respondent requests confirmation of payment. Complaint 

at 19. 

Later in June 2018, Complainant is staying at a location with limited cellular and internet 

access as she attempts to coordinate the removal of her belongings from storage. Complaint at 

21. On June 28, 2018, she alleges “unjust and unreasonable refusal to deal or negotiate in the 

matter of release of said shipment” but acknowledges that on June 29, 2018, she and 

Respondent’s representative “attempt to exchange phone calls. Poor reception interferes.” 

Complaint at 21. Accepting the factual allegations in the complaint, Respondent continued to 

communicate and deal with Complainant until her goods were released to her. The facts asserted 

do not plausibly allege a failure to deal under the Shipping Act.

The other sections of 41104 do not appear to apply either. The complaint does not 

indicate how Respondent allowed any person to obtain ocean transportation at less than the 

applicable tariff rates, such that the prohibitions under 41104(a)(1) apply; how Respondent 

provided service in the liner trade that was not in accordance with its tariff provisions, such that 

the prohibitions under 41104(a)(2)(A) apply; how Respondent retaliated against Complainant 

with regard to cargo space accommodations or discriminated against her in any way, such that 

the prohibitions under 41104(a)(3)and (4) apply; that the shipment moved under the terms of a 

service contract, such that the prohibitions under 41104(a)(5), which govern service contracts, 

apply in this case; or how Respondent accorded a preference or advantage or imposed a 

prejudice or disadvantage to anyone, in violation of 41104(a)(8). Because Complainant fired 

Respondent prior to any ocean transportation occurring, there are no allegations regarding 

whether this would have been transported via tariff or service contract because the transportation 

ended prior to that point. The complaint does not allege a plausible claim for relief under section 

41104. 

f. Section 41105 

Complainant merely recites the three 41105 sections alleged without providing any detail. 

Complaint at 38. Respondent asserts that “Complainant’s allegations entirely misconstrue [and]

misunderstand the behavior that is prohibited under § 41105.” Supplemental Motion at 25. 

 133 2 F.M.C.2d 2 F.M.C.2d
Section 41105 prohibits a “conference or group of two or more common carriers” from 

engaging in certain enumerated conduct. Respondent is the only entity alleged in this complaint 

to have committed the Shipping Act violations. Complainant does not allege that a conference or 

a group of two or more common carriers engaged in the alleged conduct. Thus, the prohibitions 

under section 41105 do not apply to the allegations and the complaint does not state a plausible 

claim for relief under section 41105. 

C. Conclusion

For the reasons discussed above, it is found that the Commission has personal and subject 

matter jurisdiction over the Shipping Act violations alleged in this complaint, but that the 

complaint fails to state a plausible claim for relief under the Shipping Act. 

Complainant has not requested an amendment to her pleadings and does not assert any 

grounds for permitting an amendment. Given that most of Complainant’s claims are based on 

Respondent’s alleged failure to perform under the parties’ agreement, it is not clear that an 

amendment would cure the deficiency in her pleadings. Therefore, the complaint could be 

dismissed without prejudice for failure to state a claim under the Shipping Act.

It is noted that Complainant requests reparations in the amount of $256,241 for lost 

income, related consequential and incidental damages, actual loss and damage of the shipment, 

pain and suffering, mental anguish and duress, damage/loss of consortium and associated 

medical expenses, and punitive damages as well as a cease and desist order. Complaint at 38-39. 

As explained in the initial order, pursuant to the Shipping Act, reparations may be awarded for 

actual damages. 46 U.S.C. § 41305(b). “Actual damages” means “compensation for the actual 

loss or injuries sustained by reason of the wrongdoing.” Tractors & Farm Equip. Ltd. v. Cosmos 

Shipping Co., Inc., 26 S.R.R. 788, 798 (ALJ 1992) (citing California Shipping Line, Inc. v. 

Yangming Marine Transport Corp., 25 S.R.R. 1213, 1230 (FMC 1990)). “It exclude[s] punitive 

or exemplary damages.” Tractors & Farm, 26 S.R.R. at 798. The parties have been advised that 

damages from pain and suffering, mental anguish and duress, damage/loss of consortium, and 

punitive damages are generally not available in Commission proceedings. Lima v. Fastway 

Moving and Storage, Inc., 34 S.R.R. 1097, 1101 (ALJ 2018) aff’d in part and vacated-in-part

1 F.M.C.2d 400, 400 (FMC 2019). 

D. Voluntary Dismissal

The request to withdraw, filed after the motion to dismiss had been fully briefed, was 

conditioned on the motion to dismiss being granted. Therefore, it was most efficient to consider 

the motion to dismiss and then address the withdrawal request. This decision clarifies for the 

parties that the Commission has jurisdiction over the Shipping Act allegations in the complaint 

and identifies the challenges to moving forward on these claims before the Federal Maritime 

Commission. Given the findings above, the request to voluntarily dismiss the claim without 

prejudice is granted. The motion to dismiss for failure to state a claim would be an alternate basis 

to dismiss the proceeding without prejudice. 

Although Complainant’s complaint here at the FMC has been dismissed, no position is 

taken as to the substantive merits of Complainant’s claims or her ability to pursue those claims in

 134 2 F.M.C.2d 2 F.M.C.2d
another forum. It is merely found that a proceeding filed at the Federal Maritime Commission 

alleging Shipping Act violations does not provide redress for the allegations in the complaint. 

IV. Order

Upon consideration of the record herein, the arguments of the parties, and the conclusions 

and findings set forth above, it is hereby 

ORDERED that Complainant Earlean Edwards Dukart’s request to withdraw or 

voluntarily dismiss the proceeding be GRANTED. The complaint is hereby DISMISSED 

WITHOUT PREJUDICE. 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 

 135 2 F.M.C.2d 2 F.M.C.2d
FEDERAL MARITIME COMMISSION

VERTERRA LTD., Complainant

v. 

D.B. GROUP AMERICA LTD. AND D.B. GROUP INDIA LTD., 

Respondents. 

DOCKET NO. 19-09 

Served: July 14, 2020 

NOTICE NOT TO REVIEW

Notice is given that the time within which the Commission could determine to review the 

Administrative Law Judge’s June 12, 2020, Initial Decision Approving Confidential Settlement 

Agreement has expired. Accordingly, the decision has become administratively final. 

Rachel E. Dickon 

Secretary

 136 2 F.M.C.2d 2 F.M.C.2d
FEDERAL MARITIME COMMISSION

Office of Administrative Law Judges

REVOCATION OF OCEAN TRANSPORTATION INTERMEDIARY 

LICENSE OF DIP SHIPPING COMPANY, LLC.

DOCKET NO. 20-04 

Served: July 29, 2020 

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

INITIAL DECISION REVOKING OCEAN TRANSPORTATION LICENSE1

[Notice Not to Review served 8/31/2020, decision administratively final.] 

I. INTRODUCTION

A. Background and Summary

Respondent Dip Shipping Company, LLC (“Dip Shipping”) is licensed as an ocean 

transportation intermediary (“OTI”) by the Federal Maritime Commission (“FMC” or 

“Commission”). On February 19, 2020, the Commission’s Bureau of Certification and Licensing 

(“BCL”) notified Dip Shipping that the Commission intended to revoke Dip Shipping’s ocean 

transportation license. 

Dip Shipping requested a hearing on the proposed revocation of its license pursuant to the 

Commission’s Rules at 46 C.F.R. § 515.17 and 46 C.F.R. Part 502, Subpart X. The Secretary

then assigned this proceeding to the Office of Administrative Law Judges for adjudication in 

accordance with the provisions of Subpart X’s Rule 702(a). 46 C.F.R. § 502.702(a). 

As required under Subpart X, BCL and the Commission’s Bureau of Enforcement 

(“BOE”) were notified of Dip Shipping’s hearing request and BOE was ordered to serve a copy 

of the revocation notice and materials supporting the revocation notice. In addition, Dip Shipping 

was informed that it had the right to file a response within 30 days of BOE’s submission. All 

required submissions have been received and this proceeding is now ripe for decision. 

Respondent Dip Shipping is a Louisiana limited liability company incorporated in 2004. 

It has been licensed with the Commission as an OTI since 2004. Roberto Dip was Dip 

1 This initial decision will become final within 22 days of service in the absence of exceptions 

filed by either party or review by the Commission. 46 C.F.R. § 502.708(c).

 137 2 F.M.C.2d 2 F.M.C.2d
Shipping’s president, qualifying individual (“QI”), and owner from 2004 to 2018. Ex. 1, 

FMC115-128; Ex. 6, FMC191; Ex. 7, FMC194. 

In November 2018, Roberto Dip and Jason Handal, a Dip Shipping manager, pleaded 

guilty and were convicted of conspiracy to fix ocean transportation intermediary prices, in 

violation of the Sherman Antitrust Act, 15 U.S.C. § 1, in a proceeding brought by the United 

States Department of Justice, Antitrust Division (“DOJ”). Following his guilty plea, Roberto Dip 

resigned his position with Dip Shipping and divested his shares to part owners, Margie 

Guadalupe Dip (“Margie Dip”) and Maria D. Dip. In July 2019, Margie Dip replaced Roberto 

Dip as QI for Dip Shipping. Dip Shipping, which had also been charged with engaging in the 

price fixing conspiracy, pleaded guilty in October 2019. After learning of Dip Shipping’s guilty 

plea, BCL notified Dip Shipping that the Commission intended to revoke its OTI license. Dip 

Shipping requested a hearing on the proposed revocation. 

As discussed below in greater detail, the evidence supports a finding that Dip Shipping is 

not qualified to provide intermediary services and Dip Shipping’s ocean transportation license is

revoked. 

B. Procedural History

On March 16, 2020, the Secretary issued a Notice of Hearing Request and Assignment 

noting that on February 19, 2020, BCL had notified Dip Shipping by letter that the Commission 

intended to revoke Dip Shipping’s OTl license. The Secretary also noted that on March 5, 2020, 

Dip Shipping 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, Subpart X. 

On March 18, 2020, in keeping with Rule 702(b), a Notice and Initial Order (“initial 

order”) was issued, notifying BCL and BOE of Dip Shipping’s hearing request and instructing 

BOE to file a copy of the notice given to Dip Shipping and BCL’s materials supporting the 

notice of revocation by April 20, 2020. 46 C.F.R. § 502.702(b). The initial order also stated that 

“BOE may file a brief with legal arguments, proposed findings of fact, or additional information, 

and any requests for confidential treatment as well as an appendix with supporting documents.” 

Initial Order at 1. In addition, the initial order stated:

Dip Shipping requests an oral hearing on this matter under 46 C.F.R. § 502.706. 

Pursuant to Rule 706, “[i]n the usual course of disposition of matters filed under 

this subpart, no oral hearing or argument will be held, but the administrative law 

judge, in their discretion, may order such hearing or argument.” 46 C.F.R. 

§ 502.706(a). At this point in the proceeding, it is not clear that there is reason to 

alter the usual course of proceeding. However, in their briefs, the parties may 

address whether an oral hearing is necessary for the adjudication of this 

proceeding. Accordingly, Dip Shipping’s request for oral hearing is DENIED 

WITHOUT PREJUDICE. 

Initial Order at 1-2. 

On April 2020, BOE filed its submissions titled “Bureau of Enforcement Submission of 

Materials Supporting Notice of Revocation,” comprising the Notice of Revocation issued to Dip 

 138 2 F.M.C.2d 2 F.M.C.2d
Shipping by BCL and an appendix of materials supporting the Notice of Revocation. On 

April 21, 2020, a Notice of Right to Respond was issued pursuant to Rule 703. 46 C.F.R. 

§ 502.703. The Notice of Right to Respond stated: 

Pursuant to Rule 703, Dip Shipping is hereby notified of its right to file a response 

to the April 20, 2020, filing. 46 C.F.R. § 502.703. Dip Shipping may file a brief 

with legal arguments, proposed findings of fact, additional information, and any 

requests for confidential treatment as well as an appendix with supporting 

documents. Dip Shipping’s response is due on May 21, 2020. 46 C.F.R. 

§ 502.703(a). 

Pursuant to Rule 704, BOE may file a reply brief within twenty days of Dip 

Shipping’s filing. 46 C.F.R. 502.704. This notice serves as notice of BOE’s right 

to file a reply. 

Notice of Right to Respond at 1. 

On May 21, 2020, Dip Shipping filed its response. In the response, Dip Shipping argued 

that its license should not be suspended, urged that an oral hearing be granted for the proceeding, 

and requested “limited discovery” on individuals at the FMC and DOJ. Response by Dip 

Shipping (“Dip Shipping Response”) at 4.2

Also, on May 21, 2020, the United States Department of Justice, Antitrust Division filed 

a Motion to File a Submission as Amicus Curiae, accompanied by an amicus curiae letter brief. 

On May 22, 2020, an Order on Motion to File a Submission as Amicus Curiae and Request for 

Hearing (“Amicus Curiae Order”) was issued, stating:

On May 21, 2020, a motion to file a submission as amicus curiae was received 

from the United States Department of Justice, Antitrust Division. Subpart X, 

which governs this proceeding, does not include a rule regarding amicus curiae

submissions. 46 C.F.R. §§ 502.701-502.709. In addition, Subpart X lists 

Commission rules that are applicable to this Subpart but does not include the rule 

regarding amicus curiae briefs, Commission Rule 73, in the list. 46 C.F.R. 

§§ 502.709, 502.73. 

The deadline for parties to respond to a motion to file an amicus curiae 

submission is not specified in the Commission’s rules. The Final Rule in Docket 

19-04, which created Subpart X, noted that “the Commission has encountered 

issues with regards to expediency and clarity of process” and that the “new

procedure will provide additional structure while ensuring a low-burden and 

efficient process.” Hearing Procedures Governing the Denial, Revocation, or 

Suspension of an OTI License, 85 Fed. Reg. 5581 (Jan. 31, 2020) [“Hearing 

Procedures”]. 

2 Dip Shipping did not number the pages in its briefs. For ease of reference, each page is treated 

as numbered chronologically, starting from the first page, through the attached exhibits. 

 139 2 F.M.C.2d 2 F.M.C.2d
To provide structure and ensure an efficient process, it is requested that the 

Bureau of Enforcement (“BOE”) incorporate any arguments regarding the amicus 

curiae submission, including what standard it thinks would be appropriate to 

review such motions in Subpart X proceedings, in BOE’s reply brief, due on

June 10, 2020. 

Also on May 21, 2020, Dip Shipping Company, LLC (“Dip Shipping”) filed its 

response which included a request for discovery and another request for oral 

hearing. Both requests are denied at this time. However, Dip Shipping may file a 

sur-reply on or before June 22, 2020, addressing the motion to file an amicus 

curiae submission, the appropriate standard for reviewing such motions, the need 

for additional discovery or a hearing, and any other arguments raised by BOE in 

their reply brief.

Amicus Curiae Order at 1.

On June 10, 2020, BOE filed a reply brief, including its response to the motion by the 

DOJ to file an amicus curiae submission. On June 19, 2020, Dip Shipping filed a sur-reply on 

the issue of the DOJ’s motion to file an amicus curiae submission. 

C. Arguments of the Parties

1. Dip Shipping’s Arguments

Dip Shipping asserts that it did not violate any provisions of the Shipping Act or the 

Commission’s regulations and did not make any materially false or misleading statements. Dip 

Shipping Response at 1. Dip Shipping opines that BCL’s conclusion that Dip Shipping is no 

longer qualified to render OTI services “is self-serving, vague, and not supported by the 

submissions of the Bureau of Enforcement, and not supported by the history of the Bureau of 

Enforcement in other cases regarding licensees which have maintained their licenses after a 

Federal guilty plea to a felony.” Dip Shipping Response at 1. 

Dip Shipping notes that BCL investigated Margie Dip prior to approving her as 

replacement QI and argues that because the illegal activities by Dip Shipping occurred from 

2010 to 2015, whereas the FMC’s approval of Margie Dip as the new QI of Dip Shipping did not 

occur until September 3, 2019, the illegal activities of Roberto Dip and Dip Shipping under his 

ownership “should in no way be connected to the activities of Dip Shipping Company LLC 

under the new ownership and management.” Dip Shipping Response at 1. Dip Shipping observes 

that there are no allegations that it committed any other illegal acts after transfer of its ownership 

to Margie Dip and Maria D. Dip, and contends that a revocation based on acts five years prior to 

the current ownership and management of the company “is not supported by any legal precedent 

cited by the Bureau of Enforcement.” Dip Shipping Response at 1. 

Dip Shipping states that it disagrees with the contention in paragraphs 21, 22, and 23 of 

BOE’s “Attachment A” (materials supporting the notice of intent to revoke), which states as part 

of the basis for the intent to revoke, that Dip Shipping failed to notify the Commission that the 

company was charged with a felony, failed to notify the Commission that it pleaded guilty to that 

felony, and failed to notify the Commission that a criminal monetary penalty had been imposed 

 140 2 F.M.C.2d 2 F.M.C.2d
against it. Dip Shipping Response at 2. Dip Shipping asserts that the declarations it submitted 

from its criminal defense counsel and from Margie Dip state that BOE “was advised through 

regular and constant communications regarding the criminal investigation and prosecution 

including the guilty plea and sentencing, of both Roberto Dip and Dip Shipping Company LLC, 

by representatives of the U.S. Department of Justice (DOJ).” Dip Shipping Response at 2. 

Dip Shipping maintains that BOE has not revoked a license in similar situations and 

maintains that a revocation of its license would constitute a “death sentence” for it as it cannot 

legally operate without an OTI license and would have to lay off its employees, who would not 

be able to find new employment. Dip Shipping Response at 3-4. Dip Shipping contends that 

BOE has “failed to allege that any actions less severe than revocation (temporary suspension or 

warning) would be [in]sufficient.” Dip Shipping Response at 4. Citing press releases from the 

FMC website, Dip Shipping contends that BOE and the FMC generally have been inconsistent in 

responding to similar offences and have not sought to revoke a license in the case of other 

companies that committed identical illegal acts. Dip Shipping Response at 4. Dip Shipping 

asserts that a revocation is unwarranted. Dip Shipping Response at 4. 

2. BOE’s Arguments

BOE contends that the “Commission has a strong policy interest in revoking an OTI 

license to protect the shipping public from those who choose not to comply with the Shipping 

Act’s requirements and to underscore the ongoing and continuous obligation to demonstrate the 

necessary character to obtain, and retain, an OTI license.” BOE Reply at 7-8. BOE asserts that 

longstanding Commission precedence supports denial or revocation of a license when the entity 

has been found guilty of federal crimes or conduct implicating moral turpitude, and that 

“perpetration of federal offenses rises to the level of the most egregious circumstances 

warranting revocation.” BOE Reply at 8 (citing G.R. Minon – Freight Forwarder License, 12 

F.M.C. 75, 82 (FMC 1968); In the Matter of Ocean Transportation License in the Name of 

Apparel Logistics, Inc., Petition for Appeal from Staff Action or in the Alternative for Initiation 

of an Investigation, 30 S.R.R. 567, 570 (FMC 2004)). BOE posits that in recent cases the 

Commission has found that revocation is appropriate when the Commission can no longer rely 

on the honesty and integrity of the licensee or its principals to the extent necessary to ensure 

future conduct complies with the Shipping Act and the Commission’s regulations. BOE Reply 

at 9.

BOE argues that the Commission has revoked an OTI license for conduct less egregious 

than the felony violation of a federal statute, pointing to cases where the Commission revoked an 

OTI license for failure to maintain an active QI and for failure to report the resignation of its QI 

and to file an application to replace the QI. BOE Reply at 10. BOE asserts:

Most of the relevant facts in this case are not in dispute and the governing law is 

settled. In view of the magnitude of Commission precedent on the issue, it is clear 

that Dip Shipping’s guilty plea in federal court to the crime of participating in a 

price fixing conspiracy constitutes violations of a statute related to carrying on 

OTI business, and therefore, establishes that Dip Shipping is no longer qualified 

to provide intermediary services within the meaning of § 40903 of the Shipping 

Act and 46 C.F.R. § 515.16(a)(4).

 141 2 F.M.C.2d 2 F.M.C.2d
BOE Reply at 10. 

Responding to Dip Shipping’s argument that the conduct leading to its plea agreement 

occurred five years ago, BOE states that the Notice of Intent to Revoke was triggered by Dip 

Shipping’s guilty plea on October 25, 2019, admission of guilt, and criminal sentencing on 

December 8, 2019. BOE Reply at 10-11. BOE posits that “[t]he impact of Dip Shipping’s illegal 

activity is very serious,” noting that Dip Shipping’s sales of freight forwarding services to the 

United States customers impacted by the price fixing scheme totaled $6,497,487. BOE Reply 

at 11 (citing BOE Ex. 12, FMC214-215). 

BOE points to paragraph 16(a) of Dip Shipping’s plea agreement with the DOJ which 

grants immunity from prosecution to Margie Dip and Maria D. Dip for Dip Shipping’s price 

fixing conspiracy. BOE opines that “[i]f Ms. Margie Dip and Ms. Maria Dip were indeed 

uninvolved in the prior illegal acts of Mr. Roberto Dip and Dip Shipping as is contended in 

Respondent’s filing, then presumably there would likewise be no need to immunize them from 

criminal prosecution.” BOE Reply at 11-12. 

Addressing Dip Shipping’s allegation that the Commission has been inconsistent in its 

treatment of entities that similarly violated federal statutes and did not revoke their licenses, 

BOE notes that the Commission entered into plea agreements with K-Line and CSAV but asserts 

that those violations “are irrelevant to this proceeding because neither K-Line nor CSAV is an 

OTI or subject to licensing.” BOE Reply at 12-13. BOE notes in addition, that “both VOCCs 

paid substantial sums in criminal fines including one instance of CSAV paying $625,000 in civil 

penalties to the Commission for violations of the Shipping Act,” while this proceeding seeks to 

revoke Dip Shipping’s license, not to impose civil penalties. BOE Reply at 13. 

Citing the Commission’s regulations at 46 C.F.R. § 515.16(a), BOE asserts that a license 

may be revoked for violation of any provision of a Commission order or regulation. BOE Reply 

at 15. BOE states that Dip Shipping and its QI, Margie Dip, failed to notify the Commission of 

Dip Shipping’s guilty plea to the price fixing charge and subsequent judgment imposing a 

criminal monetary penalty against it. BOE Reply at 15. BOE asserts that the failure to notify the 

Commission violates the Commission’s regulation at 46 C.F.R. § 515.12(e), which requires an 

applicant for an OTI license to notify the Commission within 30 days of any changes in material 

facts submitted in the application, and 46 C.F.R. § 515.20(e), which requires licensees to notify 

the Commission within 30 days of any changes in material facts, including a criminal indictment 

or conviction of a licensee. BOE Reply at 15. BOE dismisses as an “exercise in finger pointing,” 

the statement by Margie Dip that based on discussions with Dip Shipping’s criminal defense 

counsel she was not aware that she had to personally notify the Commission, as well as Dip 

Shipping’s criminal defense counsel’s statement that he believed the DOJ had relayed the 

information to the Commission. BOE Reply at 15-16. BOE opines that Margie Dip’s claim is 

“disingenuous” as she was aware of the requirements. BOE Reply at 16. BOE maintains that 

because of Dip Shipping’s failure to provide the required notification the Commission only 

learned about Dip Shipping’s plea deal and conviction months later through the DOJ press 

releases. BOE Reply at 17.

 142 2 F.M.C.2d 2 F.M.C.2d
D. Controlling Authority

1. New Subpart X Procedures

This proceeding is being adjudicated under the procedures set forth at Subpart X of the 

Commission’s Rules of Practice and Procedure, 46 C.F.R. part 502. On January 31, 2020, the 

Commission issued a Final Rule “modifying the hearing procedures governing the denial, 

revocation, or suspension of an ocean transportation intermediary (OTI) license” in order to 

“ensure a more streamlined process, and fulfill the need for more detailed procedural 

requirements.” Hearing Procedures, 85 Fed. Reg. 5579. Previously, the hearing procedures for 

denial, revocation, or suspension of an OTI license were conducted under the procedures at 46 

C.F.R. § 515.17. The new hearing procedures under the Final Rule were incorporated into part 

502 as Subpart X and are intended to “provide additional structure while ensuring a low-burden 

and efficient process.” 85 Fed. Reg. at 5581. 

2. Authority Governing OTI Activities

A person in the United States may not advertise, hold oneself out, or act as an 

ocean transportation intermediary unless the person holds an ocean transportation 

intermediary’s license issued by the Federal Maritime Commission. The 

Commission shall issue a license to a person that the Commission determines to 

be qualified by experience and character to act as an ocean transportation 

intermediary.

46 U.S.C. § 40901(a). See also 46 C.F.R. § 515.14 (“The Commission will issue 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 . . . .”). 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). 

The Commission specifies requirements for an application for a license, including:

(c) Failure to provide necessary information and documents. In the event an 

applicant fails to provide documents or information necessary to complete 

processing of its application, notice will be sent to the applicant identifying the 

necessary information and documents and establishing a date for submission by 

the applicant. Failure of the applicant to submit the identified materials by the 

established date will result in the closing of its application without further 

processing. In the event an application is closed as a result of the applicant's 

failure to provide information or documents necessary to complete processing, the 

filing fee will not be returned. Persons who have had their applications closed 

under this section may reapply at any time by submitting a new application with 

the required filing fee.

 143 2 F.M.C.2d 2 F.M.C.2d
(d) Investigation. Each applicant shall be investigated in accordance with 

§ 515.13. 

(e) Changes in fact. Each applicant shall promptly advise the Commission of any 

material changes in the facts submitted in the application. Any unreported change 

may delay the processing and investigation of the application and result in 

rejection, closing, or denial of the application. 

46 C.F.R. § 515.12(c)-515.12(e). 

The Commission shall conduct an investigation of the applicant’s qualifications 

for a license. Such investigations may address: 

(a) The accuracy of the information submitted in the application;

(b) The integrity and financial responsibility of the applicant;

(c) The character of the applicant and its qualifying individual; and 

(d) The length and nature of the qualifying individual’s experience in handling 

ocean transportation intermediary duties.

46 C.F.R. § 515.13. 

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). 

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;

 144 2 F.M.C.2d 2 F.M.C.2d
(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). 

Licensees are required to notify the Commission of changes in an existing licensee’s 

organization; death of a sole proprietor; retirement, resignation, or death of a QI; or acquisition 

of one or more additional licensees. 46 C.F.R. § 515.20(a)-515.20(d). In addition:

(e) Other changes. Other changes in material fact of a licensee shall be reported 

within thirty (30) days of such changes, in writing by mail or email 

(bcl@fmc.gov) to the Director, Bureau of Certification and Licensing, Federal 

Maritime Commission, Washington, DC 20573. Material changes include, but are 

not limited to: Changes in business address; any criminal indictment or conviction 

of a licensee, QI, or officer; any voluntary or involuntary bankruptcy filed by or 

naming a licensee, QI, or officer; changes of five (5) percent or more of the 

common equity ownership or voting securities of the OTI; or, the addition or 

reduction of one or more partners of a licensed partnership, one or more members 

or managers of a Limited Liability Company, or one or more branch offices. No 

fee shall be charged for reporting such changes. 

46 C.F.R. § 515.20(e).

The Commission recently affirmed the revocation of the ocean transportation license of 

Washington Movers, finding that Washington Movers violated Commission regulations when its 

president and QI used the OTI in an attempt to smuggle weapons outside the United States. 

Revocation of Ocean Transportation Intermediary License No. 017843 – Washington Movers, 

Inc., 1 F.M.C. 2d 5, 21 (FMC 2018) (“Washington Movers”). Washington Movers’ QI was 

convicted of unlawful export and smuggling and sentenced to 18 months in prison, probation, 

and a fine. Washington Movers, 1 F.M.C. 2d at 6. Before starting his sentence, Washington 

Movers’ QI transferred ownership and control of the company to his wife. Washington Movers, 

1 F.M.C. 2d at 6. There was no indication that the wife was involved in her husband’s criminal 

activity and she used life insurance, children’s tuition money, and proceeds from selling personal 

property to ensure that cargo en route was released. Washington Movers, 1 F.M.C. 2d at 6. The 

Commission found that because the original QI “was acting within the scope of his employment 

with the intent to benefit Washington Movers when he violated 18 U.S. C. § 554 and 22 U.S.C. 

§ 2778, Washington Movers is liable for violating these statutes as well.” Washington Movers, 

1 F.M.C. 2d at 15. Although mitigating circumstances existed, including that the wife and 

replacement QI was not involved in the criminal activity, the Commission found that license 

revocation was the appropriate remedy. Washington Movers, 1 F.M.C. 2d at 22. 

 145 2 F.M.C.2d 2 F.M.C.2d
II. FINDINGS OF FACT

1. Dip Shipping is a limited liability company domiciled in Kenner, Louisiana. BOE Ex. 6, 

FMC150. 

2. In 2003, Roberto Dip was the 100% owner and Margie Dip was a manager of Dip 

Shipping. BOE Ex. 2, FMC125. 

3. Dip Shipping filed its charter and qualified to do business in the State of Louisiana on 

February 4, 2004. BOE Ex. 6, FMC150. 

4. Dip Shipping has been licensed to operate as an OTI pursuant to FMC license number 

018752 since March 9, 2004. BOE Ex. 7, FMC194. 

5. Dip Shipping also operates in Miami, Florida; Houston, Texas; and Atlanta, Georgia. 

BOE Ex. 6, FMC159. 

6. Roberto Dip was the president and QI of Dip Shipping from November 17, 2003, through 

July 16, 2019. BOE Ex. 2, FMC115-128. 

7. Margie Dip has been involved with Dip Shipping since 2003 and has served as a 

manager, vice president, and part owner. BOE Ex. 2, FMC125; BOE Ex. 4, FMC133-

134; BOE Ex. 6, FMC152. 

8. As part of the duties she performed for Dip Shipping from 2005 to 2017, Margie Dip 

reported directly to Roberto Dip and “[c]oordinated logistics and documentation for 

containers shipped from the USA to Honduras and other Central American countries, and 

from Honduras to the USA. Issued masters for bills of lading, prepared loading manifests, 

completed Shipper’s Export Declarations (SEDs), prepared vehicle export forms for 

Customs, made bookings, provided customer service, financing and administration, 

hazmat certified, submitted IMOs to the vessel lines for validation.” BOE Ex. 6, 

FMC142. 

9. On October 2, 2018, Roberto Dip entered into an agreement with the DOJ to plead guilty 

to a charge of participating in a conspiracy with other ocean transportation intermediaries 

to fix prices for international freight forwarding services. BOE Ex. 15, FMC238-251. 

10. The illegal acts connected to the DOJ charges and guilty pleas by Roberto Dip and Dip 

Shipping occurred from at least September 2010 until at least March 2015. BOE Ex. 9, 

FMC198-199. 

11. On November 30, 2018, the DOJ issued a press release stating that Roberto Dip and 

Jason Handal, a manager at Dip Shipping at the time, had pleaded guilty that day to

orchestrating a nationwide conspiracy to fix prices for international freight forwarding 

services. Verified Statement of Clifford Johnson ¶¶ 6-7. 

12. BCL learned of Roberto Dip’s guilty plea in the price fixing scheme through a DOJ press 

release issued November 30, 2018. Verified Statement of Clifford Johnson ¶ 7. 

 146 2 F.M.C.2d 2 F.M.C.2d
13. On December 13, 2018, BCL sent a letter to Roberto Dip requesting that he provide the 

Commission with information and documents relating to the price fixing scheme. 

Verified Statement of Clifford Johnson ¶ 7. 

14. On January 7, 2019, BCL received an email from Roberto Dip acknowledging the 

December 13, 2018, letter from BCL and inquiring whether a change in the presidency of 

Dip Shipping would prevent the revocation of the company’s OTI license. Verified 

Statement of Clifford Johnson ¶ 7; BOE Ex. 4, FMC133-134. 

15. Roberto Dip proposed replacing himself as president of Dip Shipping with Margie Dip, 

the vice president of Dip Shipping. BOE Ex. 4, FMC133-134. 

16. On January 29, 2019, Representatives of the Commission had a telephone conference 

with Roberto Dip and his counsel to discuss responsive documents and the potential for 

revocation of Dip Shipping’s OTI license. Verified Statement of Clifford Johnson ¶ 9. 

17. On or about February 26, 2019, Clifford Johnson participated in a telephone conference 

between representatives of the Commission and an attorney with DOJ’s Antitrust 

Division, “regarding Dip Shipping” in which Mr. Johnson explained that licensing is 

based on character and experience of the applicant and the DOJ attorney confirmed that 

Roberto Dip had pleaded guilty to price fixing and sentencing would follow later in the 

year. Verified Statement of Clifford Johnson ¶ 10. 

18. During this discussion, in response to the DOJ attorney’s inquiry as to the criteria for OTI 

licensing, Mr. Johnson provided an explanation that licensing was based on character and 

experience of the applicant. Verified Statement of Clifford Johnson ¶ 10.

19. On April 2, 2019, counsel for Roberto Dip and Dip Shipping sent an email to BCL and 

Mr. Johnson providing the documents requested by BCL, including documentation 

showing Roberto Dip was no longer an officer of Dip Shipping and that Margie Dip and 

Maria D. Dip were the sole managers. Verified Statement of Clifford Johnson ¶ 7; BOE 

Ex. 5, FMC136-137. 

20. The April 2, 2019, communication to BCL and Mr. Johnson by Roberto Dip and Dip 

Shipping’s counsel stated in pertinent part: 

Greetings. By letter date[d] December 13, 2018, the BCL of the 

FMC advised my client, Dip Shipping Company, LLC, that it was 

aware that the company and its President, Robert Dip, had been 

criminally charged in Federal Court, and had entered pleas of 

guilty to price fixing. The company is licensed as an OTI as a 

forwarder and NVOCC.

BOE Ex. 5, FMC136. The email advised that Roberto Dip was cooperating with DOJ in 

their continuing investigation and the sentencing had been deferred. BOE Ex. 5, 

FMC136. 

 147 2 F.M.C.2d 2 F.M.C.2d
21. In an April 9, 2019, meeting between Dip Shipping’s counsel and representatives of the 

Commission, Dip Shipping’s counsel “was advised that Mr. Roberto Dip’s involvement 

with Dip Shipping, in any capacity including as an owner, was problematic for the 

Commission,” but “that the Commission would consider an application proposing Ms. 

Margie Dip as the replacement QI” and such application should be submitted after the 

sentencing of Roberto Dip. Verified Statement of Clifford Johnson ¶ 12. 

22. On June 25, 2019, the U.S. District Court for the Southern District of Florida sentenced 

Roberto Dip to prison for 18 months and imposed a $20,000.00 fine against him for 

conspiracy to restrain trade in violation of the Sherman Antitrust Act pursuant to 15 

U.S.C. § 1. BOE Ex. 15, FMC198, FMC252-258. 

23. On July 16, 2019, Dip Shipping submitted a Form FMC-18 application proposing Margie 

Dip as the replacement QI for Dip Shipping effective August 12, 2019. BOE Ex. 6, 

FMC139-192. 

24. In 2019, Roberto Dip held an 80% share of Dip Shipping while Margie Dip and Maria D. 

Dip each held a 10% share of Dip Shipping. BOE Ex. 6, FMC191. 

25. On August 12, 2019, Roberto Dip transferred the entirety of his interest equally between 

Margie Dip and Maria D. Dip, leaving each manager with 50% ownership interest in Dip 

Shipping. BOE Ex. 6, FMC146, 163, 187, 191-192. 

26. On September 3, 2019, BCL approved Margie Dip as the QI for Dip Shipping. BOE 

Ex. 8, FMC196. 

27. On September 17, 2019, the DOJ issued a press release announcing that Dip Shipping 

had agreed to plead guilty to an antitrust charge for its role in a conspiracy to fix prices of 

freight forwarding services sold to customers. BOE Ex. 9, FMC198-199. 

28. On October 25, 2019, Margie Dip entered into an agreement on behalf of Dip Shipping 

with the DOJ in which Dip Shipping agreed that it would waive indictment and plead 

guilty to a one-count charge in the U.S. District Court for the Southern District of Florida, 

of participating in a conspiracy to suppress and eliminate competition by agreeing to 

increase, fix, stabilize, and maintain prices charged to customers for freight forwarding 

services provided in the U.S. and elsewhere, in violation of the Sherman Antitrust Act, 

15 U.S.C. § 1. BOE Ex. 12, FMC212-231. 

29. On December 8, 2019, the U.S. District Court for the Southern District of Florida issued 

an amended judgment imposing a criminal monetary penalty of $488,250.00 against Dip 

Shipping for its role in the Sherman Act conspiracy. BOE Ex. 13, FMC233-236. 

30. The illegal acts connected to the DOJ charges and guilty pleas by Roberto Dip and Dip 

Shipping occurred from at least September 2010 until at least March 2015. BOE Ex. 9, 

FMC198-199. 

31. The factual basis listed in the plea agreements with Roberto Dip and Dip Shipping are the 

same except that 

 148 2 F.M.C.2d 2 F.M.C.2d
• in the plea agreement with Roberto Dip, he is listed as the “Chief Executive 

Officer of Company A,” he “was an organizer or leader in the conspiracy, which 

involved at least five participants,” and acts were carried out “within the Eastern 

District of Louisiana,” BOE Ex. 14, FMC240-242, and 

• in the plea agreement with Dip Shipping, it is identified as “a corporation 

organized and existing under the laws of Louisiana,” it “employed ten or more 

employees,” and acted “through its officers and employees,” BOE Ex. 13, 

FMC212-216. 

32. Margie Dip was never a defendant in the criminal proceedings against Roberto Dip or 

Dip Shipping Company. Declaration of Joel Denaro, attached to Dip Shipping Response 

at 29. 

33. In the Antitrust Division’s investigation, both Dip Shipping and its owner, Roberto Dip, 

promptly accepted responsibility for their conduct. DOJ Amicus Curiae Letter Brief at 1.

34. Dip Shipping cooperated fully with the investigation, including by providing evidence 

not available to the Antitrust Division through other sources. Ultimately, its cooperation 

significantly contributed to the Antitrust Division’s efforts to bring additional coconspirators to justice. DOJ Amicus Curiae Letter Brief at 1.

35. Dip Shipping is obligated under its plea agreement to continue cooperating with the DOJ 

antitrust investigation. DOJ Amicus Curiae Letter Brief at 1.

36. The plea agreement recommended “a downward departure from the [Sentencing] 

Guidelines” for the fine “because of the defendant’s substantial assistance in the 

government’s investigation and prosecutions of violations of federal criminal law in the 

freight forwarding industry.” BOE Ex. 12, FMC220. 

37. The plea agreement requires that Dip Shipping pay a criminal fine of $488,250 over the 

course of five years and that amount and pay plan were “premised on the parties’ efforts 

to ensure that the criminal case would not put Dip Shipping out of business, as 

contemplated by the criminal sentencing guidelines and accepted by the District Court in 

imposing sentence.” DOJ Amicus Curiae Letter Brief at 2.

 

38. Dip Shipping has only paid one of the six payments required under the sentence and may 

be unable to pay the criminal fine if the Commission were to revoke its license. DOJ 

Amicus Curiae Letter Brief at 2. 

39. As part of the plea agreement Margie Dip entered into on October 25, 2019, with the DOJ 

on behalf of Dip Shipping, the DOJ agreed that it would “not bring criminal charges 

against any current director, officer, or employees of the defendant for any act or offense 

committed before the date of signature of this Plea Agreement and while that person was 

acting as a director, officer, or employee of the defendant that was undertaken in 

furtherance of an antitrust conspiracy in the United States and elsewhere [except for 

Robert Dip and Jason Handal].” BOE Ex. 12, FMC225. 

 149 2 F.M.C.2d 2 F.M.C.2d
40. Margie Dip and Dip Shipping sought legal advice regarding their obligations to the FMC 

and followed that advice, which was provided with the knowledge that the DOJ attorneys 

were in contact with the FMC attorneys. Declaration of Joel Denaro ¶¶ 18-20, attached to 

Dip Shipping Response at 29. 

III. ANALYSIS

A. Pending Motions

1. The DOJ Antitrust Division’s Amicus Curiae Submission

The DOJ Antitrust Division filed a motion seeking leave to submit an amicus curiae 

submission in this proceeding. In the motion, the DOJ states in pertinent part:

The Division, through the undersigned attorneys, both conducted the investigation 

of, and negotiated the criminal plea agreements with, Mr. Dip and Dip Shipping. 

Pursuant to its plea agreement with Dip Shipping . . . the Division committed to 

“advise the appropriate officials of any governmental agency considering 

[suspension or debarment] of the fact, manner, and extent of the cooperation of 

the defendant and its related entities as a matter for that agency to consider before 

determining what action, if any to take.” Because OTI licensure revocation would 

have the same effect as suspension or debarment, to adhere to its commitments 

pursuant to the plea agreement, the Division in part seeks to apprise the 

Commission of Dip Shipping’s cooperation with its investigation.

Beyond this, however, the proposed submission is desirable to the Commission 

because it provides information uniquely in the Antitrust Division’s possession 

regarding the underlying criminal investigation and resolution with Dip Shipping. 

Additionally, the Commission’s action in this matter may impact the plea 

agreement as accepted by the federal district court, and interfere with Dip 

Shipping’s ability to pay the criminal fine that has been imposed on it. It is 

desirable that the Commission understand fully these legal and policy issues 

before rendering its decision. 

In the alternative, should the Commission receive this submission as a motion for 

permissive intervention, the Division submits that the basis for the Bureau of 

Enforcement’s proposed revocation flows directly from the Division’s 

investigation, rendering its expertise relevant to an issue involved in the 

proceeding and likely to assist the Commission in its consideration of this matter. 

46 C.F.R. 502.68(c)(ii). Further the Division’s limited intervention will not 

unduly delay or expand the scope of the proceeding, but it will assist the 

Commission in compiling a more complete – and therefore more sound – record 

on which to base its decision. The Division’s submission is limited to issues that 

are neither on the record in this matter nor in dispute.

Amicus Curiae Motion at 2-3. 

 150 2 F.M.C.2d 2 F.M.C.2d
The DOJ states that both Dip Shipping and Roberto Dip promptly accepted responsibility 

for their conduct and cooperated fully with the investigation, including providing evidence that 

could not be obtained from other sources, which “significantly contributed” to the DOJ’s efforts 

to bring additional co-conspirators to justice. DOJ Amicus Curiae Letter Brief at 1. According to 

the DOJ, the plea agreement between Dip Shipping and the DOJ requires that Dip Shipping pay 

a criminal fine of $488,250 over the course of five years and that amount and pay plan were

“premised on the parties’ efforts to ensure that the criminal case would not put Dip Shipping out 

of business, as contemplated by the criminal sentencing guidelines and accepted by the District 

Court in imposing sentence.” DOJ Amicus Curiae Letter Brief at 2. The DOJ asserts that Dip 

Shipping has only paid one of the six payments required under the sentence and may be unable 

to pay the criminal fine if the Commission were to revoke its license. DOJ Amicus Curiae Letter 

Brief at 2. 

Addressing the amicus curiae submissions by the DOJ, Dip Shipping contends that the 

“Rules of the FMC would seem to encourage such an amicus curiae submission.” Dip Shipping 

Sur-Reply at 2 (citing 46 C.F.R. §§ 502.1 and 502.12). Dip Shipping asserts that “[a]lthough the 

Federal Rules of Civil Procedure do not address amicu[s] curiae participation in district courts, 

district courts possess the inherent authority to accept amicus briefs” and that “Rule 29 of the 

Federal Rules of Appellate Procedure explicitly allow for the submission of briefs of an amicus 

curiae . . . .” Dip Shipping Sur-Reply at 1 (citing Bayshore Ford Truck Sales, Inc. v. Ford Motor 

Co., 471 F.3d, 1233, 1249 n.34 (11th Cir. 2006)). 

BOE notes that Subpart X does not contain a provision for consideration of amicus curiae 

filings. BOE Reply at 14. “BOE contends that the Division’s amicus filing should be given no 

weight inasmuch as DOJ’s support for Dip Shipping is equivocal and the result of a deal made 

by DOJ with the criminal respondent, to which the Commission was not a party.” BOE Reply at 

14. Should the DOJ’s amicus filing be accepted, BOE urges that the filing be “viewed in the 

context it was presented, as a fulfillment of a term in the plea agreement to primarily provide 

information regarding Dip Shipping’s level of cooperation and criminal fine.” BOE Reply at 14. 

BOE avers that licensing falls strictly within the Commission’s purview and its interest in 

protecting the shipping public and that “[t]he amicus filing by the Division does not supersede 

that oversight and regulatory responsibility.” BOE Reply at 14. 

Subpart X does not specifically include the amicus curiae rule in the list of rules 

applicable to Subpart X proceedings, although there is no indication in the Final Rule as to why. 

46 C.F.R. § 502.709. Commission Rule 73 provides in pertinent part that a motion for leave to 

file an amicus curiae brief must identify the interest of the applicant and must state the reasons 

why such a brief is desirable. 46 C.F.R. § 502.73. Although not binding, this rule provides 

guidance about how to review amicus curiae requests in Subpart X proceedings. 

The Commission recently discussed why leave to file an amicus brief was granted in a 

proceeding, stating that the “amicus motion identifies the Amici’s interest in filing and meets the 

Commission’s for amicus filing spelled out in Commission Rule 73. Further, the Amici are 

uniquely situated to offer a broader perspective” on the issue in question. In re: Vehicle Carrier 

Services, 1 F.M.C. 2d 175 (Order Granting Motion for Leave to File Amicus Brief) (FMC 2019). 

In addition, the “Commission has broad discretion in deciding whether to grant leave for an 

amicus brief.” In re: Vehicle Carrier Services, 1 F.M.C. 2d at 17 (citing Cobell v. Norton, 246 F. 

 151 2 F.M.C.2d 2 F.M.C.2d
Supp. 2d 59, 62 (D.D.C. 2003) (control over amicus curiae filings is committed to the court’s 

“sole discretion”)). 

The DOJ motion for leave to file an amicus curiae submission satisfies the Rule 73 

criteria and Commission caselaw. DOJ has an interest in the proceeding as this determination 

will impact Dip Shipping’s ability to pay their fine. DOJ is uniquely situated to provide 

information about the antitrust violations, investigation, and plea agreement of Dip Shipping and 

its officers as well as the cooperation provided by Dip Shipping. Indeed, Dip Shipping’s 

cooperation with the DOJ may be the most significant difference between this case and the facts 

in Washington Movers. The amicus curiae submission provides a more complete and therefore 

more sound record for this decision. The amicus curiae submission is therefore accepted.

2. DIP Shipping’s Request for Discovery and Oral Hearing

Dip Shipping requests that it be allowed to conduct discovery of FMC and DOJ 

personnel. Dip Shipping argues that discovery in this case is necessary “as it goes to the essence 

of the defense of the Licensee that the FMC was well aware of the nature and scope of the illegal 

activity to which Dip Shipping pleaded guilty and was sentenced” and that the cross-examination 

under oath of FMC and DOJ officials would help bring to light the extent of communications 

between the DOJ and FMC regarding Dip Shipping. Dip Shipping Response at 3. 

Dip Shipping also requests an oral hearing. Dip Shipping contends that only through an 

oral hearing “where the information can be elicited from the only persons who have relevant and 

material information can the extent of the communications to the FMC by the Licensee through 

its criminal defense counsel to the DOJ attorneys and by the DOJ attorneys to the FMC be 

known.” Dip Shipping Response at 3. 

BOE opposes Dip Shipping’s request for oral hearing and to conduct discovery on FMC 

and DOJ Antitrust Division staff. Noting that Subpart J of the Commission’s regulations 

governing discovery is not applicable to Subpart X, BOE posits that this is consistent with the 

Commission’s stated intent to make Subpart X proceedings more streamlined than typical part 

502 hearings. BOE Reply at 17. 

The evidence of record contains all information necessary to adjudicate this matter and 

there does not appear to be any need for discovery or an oral hearing. Moreover, as BOE notes, 

discovery is generally not applicable to Subpart X proceedings and Dip Shipping’s arguments 

that discovery or an oral hearing is necessary are not persuasive given the written evidence in the 

record. Dip Shipping’s requests for discovery and for oral hearing are, therefore, denied. 

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). “In order-to-show-cause 

revocation proceedings, the burden of proof is on BOE” and the “standard of proof is 

preponderance of the evidence.” Washington Movers, 1 F.M.C. 2d at 8. This decision is based on 

 152 2 F.M.C.2d 2 F.M.C.2d
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. BOE 

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. 

The evidence of record includes the notice of intent to revoke and the materials 

supporting the notice, Dip Shipping’s Response and supporting evidence, DOJ’s amicus curiae

letter brief, BOE’s Reply, including its proposed findings of fact, and Dip Shipping’s sur-reply.

C. Discussion

1. Notice under 46 C.F.R. §§ 515.12(e) and 515.20(e)

BOE alleges that Dip Shipping and its QI, Margie Dip, failed to notify the Commission 

of the felony charge against the company, the company’s guilty plea, and the company’s 

subsequent criminal conviction, in violation of sections 515.12(e) and 515.20(e) of the 

Commission’s regulations. BOE Reply at 15. 

Dip Shipping denies these allegations and avers that: 

[a]s stated in the attached Declaration by criminal defense attorney Joel Denaro, 

on behalf of both Mr. Roberto Dip and Dip Shipping Company LLC, and the 

attached Declaration of Ms. Margie Guadalupe Dip, the Bureau of Enforcement 

was advised through regular and constant communications regarding the criminal 

investigation and prosecution including the guilty plea and sentencing, of both 

Roberto Dip and Dip Shipping Company LLC, by representatives of the U.S. 

Department of Justice (DOJ).

Dip Shipping Response at 2. Margie Dip states in relevant part as follows: 

8. I was unaware that I, personally, as the Manager of Dip Shipping Company 

LLC, had to advice the FMC that Dip Shipping Company LLC had 

[pleaded] guilty to a criminal charge.

9. I was under the assumption that the FMC was fully informed of the status 

of the plea negotiations and criminal resolution of the case through the 

United States Department of Justice attorneys who were prosecuting the 

criminal case against both Roberto Dip and Dip Shipping Company LLC. 

 153 2 F.M.C.2d 2 F.M.C.2d
11. My belief was based in part upon Joel Denaro advising me that the DOJ 

attorneys advised him that they were in contact with the appropriate 

representatives from the FMC regarding the FMC OTI License of Dip 

Shipping Company LLC. 

Declaration of Margie Guadalupe Dip, attached to Dip Shipping Response at 23. 

In addition, Respondent’s criminal attorney, Joel Denaro, Esq., filed an affidavit stating:

22. I was under the assumption that the FMC was fully informed of the status 

of the plea negotiations and criminal resolution of the case through the 

United States Department of Justice attorneys who were prosecuting the 

criminal case against both Roberto Dip and Dip Shipping Company LLC. 

Declaration of Joel Denaro, attached to Dip Shipping Response at 28. 

Section 515.12(e)3

 provides that “[e]ach applicant shall promptly advise the Commission 

of any material changes in the facts submitted in the application. Any unreported change may 

delay the processing and investigation of the application and result in rejection, closing, or denial 

of the application.” 46 C.F.R. § 515.12(e). Section 515.20(e) states that “changes in material fact 

of a licensee shall be reported within thirty (30) days of such changes, in writing by mail or 

email (bcl@fmc.gov) to the Director, Bureau of Certification and Licensing, Federal Maritime 

Commission, Washington, DC 20573” and that “[m]aterial changes include, but are not limited 

to: . . . any criminal indictment or conviction of a licensee, QI, or officer.” 46 C.F.R. § 515.20(e). 

BCL’s concern about notification of the case against Dip Shipping raises the question of 

whether the proceedings against Dip Shipping and Roberto Dip constituted different cases. On 

the surface, they have different case names and docket numbers, although the same judge. BOE 

Ex. 13, FMC233; BOE Ex. 14, FMC253. The plea agreement with Dip Shipping was signed 

almost a year after the plea agreement with Roberto Dip, possibly to ensure continued 

cooperation with the ongoing investigation. However, the substance of the factual allegations is 

essentially the same and it appears that they arose out of the same DOJ investigation. Margie Dip 

was never a defendant in the criminal proceedings against Roberto Dip or Dip Shipping 

Company. Declaration of Joel Denaro, attached to Dip Shipping Response at 29. Certainly, BCL 

could have inquired further if it had any concerns. 

Dip Shipping’s contention that the Commission was aware of the criminal case against 

Dip Shipping is supported by correspondence between Dip Shipping and Commission staff, 

included in BOE’s submission. On April 2, 2019, in an email to BCL staff, Dip Shipping’s 

counsel states in pertinent part: 

Greetings. By letter date[d] December 13, 2018, the BCL of the FMC advised my 

client, Dip Shipping Company, LLC, that it was aware that the company and its 

President, Robert Dip, had been criminally charged in Federal Court, and had 

3 It is not clear that section 515.12(e), which states that an unreported change may “delay the 

processing and investigation of an application” or result in its “rejection, closing, or denial,” applies to 

Dip Shipping, whose application had already been approved.

 154 2 F.M.C.2d 2 F.M.C.2d
entered pleas of guilty to price fixing. The company is licensed as an OTI as a 

forwarder and NVOCC.

BOE Ex. 5, FMC136 (emphasis added). 

By the time Dip Shipping’s counsel sent this email, Commission staff were already in 

communication with the DOJ regarding Dip Shipping (see Verified Statement of Clifford

Johnson ¶ 10 (stating that there was a telephone conference between representatives of the 

Commission and a DOJ attorney “regarding Dip Shipping”)). The above email suggests that 

BCL was aware that Dip Shipping was being charged along with its president, Roberto Dip. If 

BCL was not aware that the corporation was charged, then this email from Dip Shipping’s 

counsel disclosed that fact and put BCL on notice that the price fixing charges also included Dip 

Shipping. 

The evidence shows that BCL had discussions with both the DOJ attorneys and with Dip 

Shipping’s counsel in the criminal proceeding. Because Dip Shipping’s request for discovery 

from DOJ and BCL is denied, the record contains only limited information about these

conversations. However, DOJ states that the “criminal fine amount and payment plan were 

premised on the parties’ efforts to ensure that the criminal case would not put Dip Shipping out 

of business.” DOJ Amicus Curiae Letter Brief at 2. 

To ensure that Dip Shipping is able to pay its criminal fine in full, Antitrust 

Division staff contacted FMC officials in the course of their investigation to 

inquire about licensure issues. To date, Dip Shipping has paid only one of the six 

payments required by its criminal judgment. Should the company cease to operate 

as a result of losing its ocean transportation intermediary license, the Antitrust 

Division anticipates that Dip Shipping will be unable to pay the fine imposed by 

the District Court.

DOJ Amicus Curiae Letter Brief at 2. DOJ’s contact with the Commission regarding whether 

Dip Shipping could keep its license and pay a criminal fine was only necessary if DOJ intended 

to charge and fine Dip Shipping. 

Moreover, BCL had seen Roberto Dip’s plea agreement, which has the same factual basis

as Dip Shipping’s plea agreement except that: 

• in the plea agreement with Roberto Dip, he is listed as the “Chief Executive Officer of 

Company A,” he “was an organizer or leader in the conspiracy, which involved at least 

five participants,” and acts were carried out “within the Eastern District of Louisiana,” 

BOE Ex. 14, FMC240-242, and 

• in the plea agreement with Dip Shipping, it is identified as “a corporation organized and 

existing under the laws of Louisiana,” it “employed ten or more employees,” and acted 

“through its officers and employees,” BOE Ex. 13, FMC212-216. 

Therefore, BCL should have been aware of the criminal allegations against Dip Shipping even if 

BCL may not have been aware of the final determination regarding the amount and payment plan 

for Dip Shipping’s criminal fine.

 155 2 F.M.C.2d 2 F.M.C.2d
Clearly, there was a misunderstanding. The attorneys for DOJ and Dip Shipping were 

well aware that Dip Shipping was being criminally charged, as well as Roberto Dip, but this 

information was not understood by BCL. The responsibility for this misunderstanding should not 

fall exclusively on the least sophisticated entity involved. Indeed, Margie Dip and Dip Shipping 

sought legal advice regarding their obligations to the FMC and followed that advice, which was 

provided with the knowledge that the DOJ attorneys were in contact with the FMC attorneys. 

Declaration of Joel Denaro ¶¶ 18-20, attached to Dip Shipping Response at 29. It was reasonable 

for Margie Dip, Dip Shipping, and their counsel to assume that BCL had asked any questions 

pertinent to the DOJ antitrust investigation and anticipated sentencing of Dip Shipping prior to 

granting Margie Dip the license to act as replacement QI.

In Washington Movers, the Commission stated “Washington Movers’ failure to notify the 

Commission of [the QI’s] conviction would not likely, taken alone, warrant revocation. By the 

time of his conviction, the Commission was well aware of [the QI’s] legal troubles.” Washington 

Movers, 1 F.M.C. 2d at 21. Here, as well, by the time of the plea agreement with Dip Shipping, 

the Commission was well aware of the criminal activity of both Roberto Dip and Dip Shipping 

from 2010-2015. 

In his affidavit, Clifford Johnson states that “[a]t no time on or after September 17, 2019, 

did Dip Shipping notify the Commission that the company was charged with a felony,” that the 

“company pleaded guilty to a felony,” or that judgement was entered imposing a criminal 

monetary penalty. Verified Statement of Clifford Johnson ¶¶ 21-23. However, as noted above, 

BOE received an email dated April 2, 2019, and had conversations with relevant attorneys on 

January 29, 2019, February 26, 2019, and April 19, 2019. It is not clear why Dip Shipping would 

be required to advise BCL of the charges after the date of the DOJ press release if BCL was 

aware of the criminal activity prior to that date.

The cited regulation requires that changes in material fact be disclosed in writing to BCL 

by email or by mail, not that changes be disclosed by a specific person within the company. See

46 C.F.R. § 515.20(e). The April 2, 2019, email by Dip Shipping’s counsel satisfies the 

disclosure requirement. BCL was in communication with DOJ and Respondent’s criminal 

attorney and could have inquired further regarding any anticipated plea agreements or fine. 

Because additional discovery is denied, the record contains very limited information about these 

conversations. The evidence does not support the allegations that Dip Shipping failed to notify 

the Commission of the DOJ’s criminal investigation and prosecution of Dip Shipping. 

Accordingly, BOE has not met its burden to show that Dip Shipping failed to notify the 

Commission as required by sections 515.12(e) and 515.20(e). 

2. Character of the QI

Dip Shipping notes that BCL investigated Margie Dip in 2019, prior to approving her as 

QI, well after the illegal activities by Dip Shipping, which occurred from 2010 to 2015. The 

FMC’s approval of Margie Dip as the new QI of Dip Shipping did not occur until September 3, 

2019. Dip Shipping Response at 1. Dip Shipping argues that therefore, the illegal activities of 

Roberto Dip and Dip Shipping under his ownership “should in no way be connected to the 

activities of Dip Shipping Company LLC under the new ownership and management.” Dip 

Shipping Response at 1. 

 156 2 F.M.C.2d 2 F.M.C.2d
BOE, on the other hand, argues that there is “longstanding Commission precedent 

supporting denial or revocation of a license where the entity has been found guilty of federal 

crimes” and notes that Dip Shipping’s plea agreement with the DOJ grants immunity from 

prosecution to Margie Dip and Maria D. Dip for Dip Shipping’s price fixing conspiracy. BOE 

Reply at 8-9. BOE argues that if Margie Dip had not been involved in the illegal conduct by 

Roberto Dip and Dip Shipping, there would have been no need to immunize her from criminal 

prosecution.” BOE Reply at 11-12. BOE does not specifically request a finding as to whether 

Margie Dip’s character is sufficient to meet the Commission’s requirements of a QI.

Section 515.11 states that a QI must have at least three years’ experience in OTI activities 

in the United States “and the necessary character to render ocean transportation intermediary 

services.” 46 C.F.R. § 515.11(a)(1). “In addition to information provided by the applicant and its 

references, the Commission may consider all information relevant to determining whether an 

applicant has the necessary character to render ocean transportation intermediary services . . . .” 

46 C.F.R. § 515.11(a)(2). 

As Dip Shipping correctly notes, BCL investigated Margie Dip prior to approving her as 

QI. Dip Shipping Response at 1. The materials submitted by Margie Dip in her application to 

replace Roberto Dip as QI for Dip Shipping provide the following information: 

• Margie Dip has been involved with Dip Shipping since 2003 and has served as a 

manager, vice president, and part owner. BOE Ex. 2, FMC125; BOE Ex. 4, FMC133-

134. 

• Prior to Roberto Dip’s transfer of 40% ownership interest in Dip Shipping to Margie Dip 

on August 12, 2019, Margie Dip held 10% ownership interest in Dip Shipping. BOE 

Ex. 6, FMC191. 

• As part of the duties she performed for Dip Shipping from 2005 to 2017, Margie Dip 

reported directly to Roberto Dip and “[c]oordinated logistics and documentation for 

containers shipped from the USA to Honduras and other Central American countries, and 

from Honduras to the USA. Issued masters for bills of lading, prepared loading manifests, 

completed Shipper’s Export Declarations (SEDs), prepared vehicle export forms for 

Customs, made bookings, provided customer service, financing and administration, 

hazmat certified, submitted IMOs to the vessel lines for validation.” BOE Ex. 6, 

FMC142. 

In addition, the evidence of record provides the following information: 

• The illegal acts connected to the DOJ charges and guilty pleas by Roberto Dip and Dip 

Shipping occurred from at least September 2010 until at least March 2015. BOE Ex. 9, 

FMC198-199. 

• As part of the plea agreement Margie Dip entered into on October 25, 2019, with the DOJ 

on behalf of Dip Shipping, the DOJ agreed that it would “not bring criminal charges 

against any current director, officer, or employees of the defendant for any act or offense 

 157 2 F.M.C.2d 2 F.M.C.2d
committed before the date of signature of this Plea Agreement and while that person was 

acting as a director, officer, or employee of the defendant that was undertaken in 

furtherance of an antitrust conspiracy in the United States and elsewhere [except for 

Robert Dip and Jason Handal].” BOE Ex. 12, FMC225. 

The record contradicts Dip Shipping’s contention that the illegal activities by Roberto 

Dip and Dip Shipping under Roberto Dip’s ownership “should in no way be connected to the 

activities of Dip Shipping Company LLC under the new ownership and management.” Dip 

Shipping Response at 1. The record shows that Margie Dip has served as a manager, vice 

president, and part owner of Dip Shipping. The record does not indicate, however, when Margie 

Dip became a part owner, vice president, or officer of Dip Shipping. Compare FMC191 with 

FMC125. In addition, the evidence does not indicate whether or not Margie Dip was aware of or 

involved in the price fixing conspiracy. 

The plea agreement between DOJ and Dip Shipping immunizes Margie Dip from 

criminal charges by DOJ. BOE Ex. 12, FMC225. BOE’s argument that this immunization is 

evidence of guilt is not supported by any evidence and appears to be conjecture. Margie Dip’s 

culpability would have been an appropriate area of inquiry, however, in the Commission’s 

conversations with the DOJ prior to approving her as QI of Dip Shipping. 

DOJ has an explicit policy of seeking jail time for officers at corporations engaged in 

illegal conduct in addition to fines imposed against corporations. DOJ also has policies guiding 

when they reserve the right to prosecute a corporate officer. “A decision about who to prosecute 

or whether to reserve the right to prosecute a corporate official always involves a careful, 

individualized assessment of one’s culpability based on evidence.” Brent Snyder, Individual 

Accountability for Antitrust Crimes, at 14 (2016), www.justice.gov/opa/file/826721/download. 

Here, Margie Dip was a manager, and possibly an officer and/or owner, of Dip Shipping during 

the illegal activity. DOJ’s decision not to charge her but rather to provide her with immunity 

does not support BOE’s argument that she was aware of or involved in Roberto Dip’s illegal 

activity. Of course, DOJ’s burden of proof to establish a criminal antitrust violation is higher 

than the Commission’s burden of proof to revoke a license. In addition, different legal issues are 

involved in establishing an antitrust conspiracy as opposed to character under the Shipping Act. 

The evidence of record is not sufficient to determine whether or not Margie Dip has the 

“necessary character to render ocean transportation intermediary services” required at 46 C.F.R. 

§ 515.11 for a QI. Ideally, more information would be available before finding that being a 

manager at a company where illegal activity occurs disqualifies someone from having sufficient 

character to act as a QI. The Commission’s staff investigated and approved Margie Dip as QI for 

Dip Shipping with knowledge of the factual allegations supporting the plea agreement with 

Roberto Dip and may have relied on information not in the record to make that determination.

Subpart X proceedings are designed to ensure “a low-burden and efficient process.” Hearing 

Procedures, 85 Fed. Reg. at 5581. Therefore, to avoid delay, additional information will not be 

ordered because a determination of this issue is not explicitly requested and is not necessary for 

the adjudication of whether Dip Shipping’s license should be revoked. 

 158 2 F.M.C.2d 2 F.M.C.2d
3. DIP Shipping is Not Qualified to Render Ocean Transportation 

Intermediary Services

BOE argues that longstanding Commission precedence supports denial or revocation of a 

license when the licensee has been found guilty of federal crimes or conduct implicating moral 

turpitude. BOE Reply at 8. However, Dip Shipping dismisses the conclusion that it is no longer 

qualified to render OTI services as “self-serving, vague, and not supported by the submissions of 

the Bureau of Enforcement, or other cases in which licensees have maintained their licenses after 

a Federal guilty plea to a felony.” Dip Shipping Response at 1.

Dip Shipping argues that because the illegal activities by Dip Shipping occurred from 

2010 to 2015, whereas the FMC’s approval of Margie Dip as the new QI of Dip Shipping did not 

occur until September 3, 2019, the illegal activities of Roberto Dip and Dip Shipping under his 

ownership “should in no way be connected to the activities of Dip Shipping Company LLC 

under the new ownership and management.” Dip Shipping Response at 1. Dip Shipping contends 

that a revocation based on acts five years prior to the current ownership and management of the 

company “is not supported by any legal precedent cited by the Bureau of Enforcement.” Dip 

Shipping Response at 1. 

Section 515.16(a)(4) provides that an OTI license may be revoked based on a 

Commission determination that the licensee is not qualified to render intermediary services. It is 

undisputed that Dip Shipping committed a felony by engaging in a conspiracy to fix prices for 

ocean intermediary transportation services, and that a criminal fine was imposed against it for the 

felony. BOE Ex. 12, FMC212-231; BOE Ex. 13, FMC233-236. 

In Washington Movers, the Commission found that the character of the OTI’s owner and 

QI, who had committed crimes involving smuggling and attempted unlawful export of defense 

articles, was imputable to the OTI and related to OTI services, thus the OTI’s conduct rendered 

the OTI unqualified to render OTI services under Commission precedent. Washington Movers, 1 

F.M.C. 2d at 18 (citing Falcon Shipping Inc. – Application for a License as an Ocean 

Transportation Intermediary, 32 S.R.R. 382, 384 (FMC 2012) (the Commission found that it 

was appropriate to deny the OTI’s application for lack of requisite character because, among 

other things, the owner violated the Shipping Act and was involved in an illegal scheme and 

deceptive practice); Stallion Cargo, Inc. – Possible Violations of the Shipping Act of 1984, 29 

S.R.R. 665, 683-684 (FMC 2001) (the Commission found that the licensee lacked necessary 

character due to Shipping Act violations); Independent Freight Forwarder License E.L. Mobley, 

Inc., 21 F.M.C. 845, 847 (FMC 1979) (the Commission found that forgery reflected on fitness); 

Independent Ocean Freight Forwarder Application Lesco Packing Co., 19 F.M.C. 132, 137 

(FMC 1976); and Harry Kaufman – Independent Ocean Freight Forwarder License No. 35, 16 

F.M.C. 263, 271, 276-277 (Examiner 1972)). Here, Dip Shipping was specifically charged with a 

felony and agreed to pay a fine in the plea agreement, therefore, it is even more clear that the 

OTI is responsible for the illegal conduct.

The case law demonstrates that there is an adequate basis to conclude that due to Dip 

Shipping’s guilty plea to the charge of price fixing in violation of the Sherman Antitrust Act, and 

subsequent plea agreement, Dip Shipping lacks the necessary character to render ocean 

transportation intermediary services and thus that Dip Shipping is not qualified to render 

 159 2 F.M.C.2d 2 F.M.C.2d
intermediary services. Moreover, “a licensed OTI is ‘strictly responsible’ for the acts or 

omissions of any of its employees or agents rendered in connection with the conduct of its 

business” so that Dip Shipping is responsible for the criminal acts of Roberto Dip and Jason 

Handal. Washington Movers, 1 F.M.C. 2d at 13 n.12. Even if Margie Dip was not aware of or 

involved in Dip Shipping’s criminal activity, like the replacement owner and QI of Washington 

Movers, who was not implicated in the criminal conduct, Dip Shipping’s license can still be 

revoked. 

In mitigation, Roberto Dip and Dip Shipping cooperated with the DOJ investigation and 

provided valuable information. This type of cooperation benefits the shipping industry and is a 

mitigating factor. In addition, the DOJ’s concern that Dip Shipping may not be able to pay the 

remainder of its monetary penalty should its license be revoked is well taken. However, the 

Commission has revoked the licenses of other companies convicted of felonies, even where there 

are mitigating factors. See, e.g., Washington Movers, 1 F.M.C. 2d at 12. Although the 

Commission could choose to impose a lesser sanction such as a civil penalty, warning, or 

temporary suspension of the license, there is sufficient evidence to support the notice to revoke 

the license. Accordingly, the evidence supports a revocation of Dip Shipping’s ocean 

transportation license.

D. Conclusion

Based on the foregoing, it is found that the evidence does not support a finding that Dip 

Shipping violated the Commission’s regulations at 46 C.F.R. §§ 515.12(e) and 515.20(e) 

regarding notice of material changes. However, the evidence supports the revocation of Dip 

Shipping’s ocean transportation license number 018752 based on Dip Shipping’s conviction of 

conspiracy to fix ocean transportation intermediary prices in violation of the Sherman Antitrust 

Act, and that Dip Shipping is not qualified to render intermediary services.

IV. ORDER

Upon consideration of the evidence and arguments submitted by the parties, the findings 

of fact and conclusions of law, and for the reasons stated above, it is hereby 

ORDERED that the Department of Justice, Antitrust Division’s motion seeking leave to 

file an amicus curiae submission be GRANTED. It is 

FURTHER ORDERED that Dip Shipping’s request for discovery and an oral hearing 

be DENIED. It is

FURTHER ORDERED that Dip Shipping Company, LLC’s ocean transportation 

license number 018752 be REVOKED pursuant to 46 C.F.R. § 515.16(a)(4) and 46 U.S.C. 

§ 40903(a)(4). It is 

FURTHER ORDERED that Dip Shipping Company, LLC cease and desist all ocean 

transportation intermediary activities.

Erin M. Wirth

Chief Administrative Law Judge 

 160 2 F.M.C.2d 2 F.M.C.2d
FEDERAL MARITIME COMMISSION

Office of Administrative Law Judges

MAC INDUSTRIES, INC. D/B/A MAC CONTAINER LINE, 

Complainant

v. 

COSCO SHIPPING LINES CO., LTD., Respondent. 

DOCKET NO. 20-09 

Served: July 29, 2020 

BEFORE: Erin M. WIRTH, Chief Administrative Law Judge. 

INITIAL DECISION APPROVING CONFIDENTIAL SETTLEMENT AGREEMENT1

[Notice Not to Review served 8/31/2020, decision administratively final.]

On June 5, 2020, Complainant MAC Industries, Inc. d/b/a MAC Container Line (“MAC 

Industries”) filed a complaint alleging violations of the Shipping Act including that Respondent 

COSCO SHIPPING Lines Co., Ltd. (“COSCO”) violated 46 U.S.C. § 41104(3) by denying 

MAC Industries access to shipping rates normally available to volume shippers. The complaint 

states that volume “VIP Partner” rates were denied as retaliation for a prior complaint by MAC

Industries regarding other rate-setting policies. 

On July 6, 2020, Respondent filed a motion seeking a one-week extension of time to 

respond to the complaint, asserting that the parties were engaged in good faith negotiations to 

resolve the dispute. On July 7, 2020, an order was issued granting an extension to July 13, 2020, 

for COSCO to respond to the complaint. 

On July 10, 2020, MAC Industries and COSCO filed a joint petition for approval of 

settlement (“motion”) and attached a copy of the confidential settlement agreement. On July 16, 

2020, the parties submitted a confidential settlement agreement attachment, which had been 

inadvertently omitted. The parties jointly move for approval of the settlement agreement, 

voluntary dismissal of the proceeding with prejudice, and confidentiality for the 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.

 161 2 F.M.C.2d 2 F.M.C.2d
Using language borrowed in part from the Administrative Procedure Act,2 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).

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 American Jurisprudence, 2d Ed., 777-778 

(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 

2 “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).

 162 2 F.M.C.2d 2 F.M.C.2d
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 the instant case, the settlement is the result of arm’s-length negotiations 

between two sophisticated entities, both 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. 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 2-3. 

Based on the representations in the 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 settlement discussions. The proceeding was filed recently and 

would require potentially expensive additional 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. There is no evidence of fraud, duress, undue influence, 

mistake, or harm to the public. 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 full text of the 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 petition to approve the settlement agreement between MAC 

Industries, Inc. and COSCO SHIPPING Lines Co., Ltd. be GRANTED. It is 

 163 2 F.M.C.2d 2 F.M.C.2d
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 

 164 2 F.M.C.2d 2 F.M.C.2d
FEDERAL MARITIME COMMISSION

EARLEAN EDWARDS DUKART, Complainant

v. 

OCEAN STAR INTERNATIONAL INC., D/B/A INTERNATIONAL 

VAN LINES, Respondent. 

DOCKET NO. 20-03 

Served: August 11, 2020 

NOTICE NOT TO REVIEW

Notice is given that the time within which the Commission could determine to review the 

Administrative Law Judge’s July 10, 2020, Initial Decision Granting Voluntary Dismissal has 

expired. Accordingly, the decision has become administratively final. 

Rachel E. Dickon 

Secretary

 165 2 F.M.C.2d 2 F.M.C.2d
FEDERAL MARITIME COMMISSION

DIP SHIPPING COMPANY, LLC., REVOCATION OF OCEAN 

TRANSPORTATION INTERMEDIARY LICENSE NO. 018752 DOCKET NO. 20-04 

Served: August 31, 2020 

NOTICE NOT TO REVIEW

Notice is given that the time within which the Commission could determine to review the 

Administrative Law Judge’s July 29, 2020, Initial Decision Revoking Ocean Transportation 

License has expired. Accordingly, the decision has become administratively final. 

Rachel E. Dickon 

Secretary

 166 2 F.M.C.2d 2 F.M.C.2d
FEDERAL MARITIME COMMISSION

MAC INDUSTRIES, INC. D/B/A MAC CONTAINER LINE, 

Complainant

v. 

COSCO SHIPPING LINES CO., LTD., Respondent. 

DOCKET NO. 20-09 

Served: August 31, 2020 

NOTICE NOT TO REVIEW

Notice is given that the time within which the Commission could determine to review the 

Administrative Law Judge’s July 29, 2020, Initial Decision Approving Confidential Settlement 

Agreement has expired. Accordingly, the decision has become administratively final. 

Rachel E. Dickon 

Secretary

 167 2 F.M.C.2d 2 F.M.C.2d
FEDERAL MARITIME COMMISSION

HANGZHOU QIANWANG DRESS CO.,

LTD., 

 Complainant, 

 v. 

RDD FREIGHT INTERNATIONAL INC., 

 Respondent. 

 

 

 Docket No. 17-02 

 

Served: September 1, 2020 

BY THE COMMISSION: Michael A. KHOURI, Chairman, Rebecca F. DYE, Louis E. 

SOLA, and Carl W. BENTZEL, Commissioners; Daniel B. MAFFEI, Commissioner, dissenting. 

ORDER AFFIRMING INITIAL DECISION ON REMAND

On November 7, 2019, the Administrative Law Judge (ALJ) issued an Initial Decision on 

Remand (I.D.R.) dismissing Complainant’s complaint, dismissing Respondent’s counterclaim, 

and discontinuing this proceeding. The Commission determined to review this decision, and, for 

the reasons set forth below, affirms the Initial Decision on Remand. 

I. BACKGROUND

A. Factual Background 

This case involves a dispute between a garment manufacturer, an ocean transportation 

intermediary, and a consignee. Complainant Hangzhou Qianwang Dress Co. Ltd. manufactures 

apparel, such as hats and gloves, and sells it to retailers in the United States. I.D.R. at 8. In May 

2016, Complainant entered into an agreement with Respondent RDD Freight International, Inc., 

under which Respondent would transport Complainant’s apparel from China to New York. 

Complainant’s Prop. Finding of Fact (CFF) at 2; I.D.R. at 8. Respondent is a non-vesseloperating common carrier (NVOCC) and ocean freight forwarder licensed by the Commission. 

 168 2 F.M.C.2d 2 F.M.C.2d
I.D.R. at 8. For the three shipments at issue in this case, the purchaser of the apparel and 

consignee of the shipments was SWAK Kids, Inc. I.D.R. at 8; CFF at 3.1

 

As to the first shipment, the invoice is dated August 22, 2016, the bill of lading is dated 

August 25, 2016, and the value of the apparel is listed as $57,273. I.D.R. at 8, 9. As to the second 

shipment, the invoice is dated August 28, 2016, the bill of lading is dated August 31, 2016, and 

the value of the apparel is listed as $54,137. Id. at 9.2 As to the third shipment, the invoice is 

dated February 13, 2016, the bill of lading is dated September 15, 2016, and the value of the 

apparel is listed as $22,797. Id.

It appears that the shipments arrived in New York in September and October 2016. 

Complainant’s Remand Br. at 1 (noting that three containers “were released three separate times 

in the month of September and October 2016”). Respondent released the shipments to SWAK 

Kids without receiving the original bills of lading or permission from Complainant. I.D.R. at 9; 

CFF at 3; Resp. Prop. Finding of Fact (RFF) at 1-2. At the time of release, SWAK Kids had not 

yet paid Complainant for the apparel, and Complainant would not have authorized release of the 

apparel until SWAK Kids paid for it. CFF at 3. 

According to Respondent, it mistakenly released the shipments due to assurances from 

SWAK Kids that it had contacted Complainant, with whom it had a long relationship. 

Respondent also claimed that SWAK Kids urged Respondent to release the shipments to avoid 

incurring demurrage: 

Above Cargo was released because Victor of S.W.A.K. Indicated he had spoken 

with Shipper regarding payment. Victor also mentioned that he had taken care of 

payment with shipper and has known them for over 15 years and tricked me into 

thinking and believed that he was trust worthy base on previous shipment never 

missed payment to us, and he confirmed it will be no problem in releasing cargo. I 

also threatened force over the phone from him by shouted and yelled to get his 

cargo released from terminal so they wouldn’t have to pay approximately $450 

per day in demurrage charges. I released a container on three different occasions 

based on above. Victor created the problem with his words, and lies that he did 

contacted and clear with shipper. When I mentioned victor over the phone to clear 

with his shipper he shout back to me that (this is not your problem just released 

the cargo because I sent you money already) that’s the reason why I released 

cargo to him. And later I found out he did not get the telex released because he 

failed to make the payment to shipper. 

I.D.R. at 10-11 (quoting Respondent’s Appendix. at 16); see also RFF at 1-2 (asserting that 

Respondent was defrauded and misled by SWAK Kids into releasing the shipments). 

1 According to Complainant, there were several intermediaries between it and the consignee: Complainant 

– Zhejiang Handsome International Logistics Co. – Eumex Line Ningbo Limited – Respondent – SWAK 

Kids, Inc. Complainant’s Appendix at 21. Due to the nature of the claims, this order focuses on the 

relationships between Complainant, Respondent, and SWAK Kids. 

2 The ALJ noted that an email listed the value of this apparel as $53,338. I.D.R. at 9. 

 169 2 F.M.C.2d 2 F.M.C.2d
After learning that the containers should not have been released, Respondent attempted to 

work with SWAK Kids to ensure that it paid Complainant for the apparel. I.D.R. at 10. 

Respondent invited Complainant to file a lawsuit against it, with the understanding that 

Respondent would then hale SWAK Kids into court and make it pay. Id. (“We told him we did 

not mind to let him file the law suit against us and then we can put the consignee into the court as 

the defendant as well . . .”) (quoting Complainant’s Appendix at 18). SWAK Kids eventually 

paid $10,000 for the apparel in the three shipments, leaving an outstanding balance of $123,408. 

Id. at 11. 

B. Procedural History

 On February 17, 2017, Complainant filed a complaint alleging that Respondent violated 

46 U.S.C. § 41102(c). Complainant alleged that it sustained damages of $134,207.70, and it also 

sought a cease-and-desist order. Respondent denied the allegations and counterclaimed, alleging 

that Complainant conspired with SWAK Kids to defraud Respondent by failing to alert 

Respondent to the problems with SWAK Kids and by failing to pursue or collect monies for the 

apparel from SWAK Kids. Ans. ¶¶ 12-13. 

On August 29, 2018, the ALJ issued an Initial Decision finding that Respondent violated 

§ 41102(c) by releasing cargo without a bill of lading or Complainant’s permission. Hangzhou 

Qianwang Dress Co., Ltd. v. RDD Freight International Inc., 1 F.M.C.2d 158, 173 (ALJ 2018). 

The ALJ rejected Respondent’s counterclaim and its argument that Complainant had waived its 

claims via a settlement agreement. Id. at 169-170, 171-72.3

 The ALJ awarded Complainant 

reparations of $61,704 and ordered Respondent to cease and desist from releasing cargo without 

presentation of an original bill of lading. Id. at 173. 

The Commission determined to review the decision, and, on March 7, 2019, the 

Commission vacated the Initial Decision and remanded the case for consideration in light of the

Commission’s revised interpretation of 46 U.S.C. § 41102(c). Hangzhou Qianwang Dress Co. v. 

RDD Freight Int’l, Inc., 1 F.M.C.2d 262, 263 (FMC 2019). The ALJ subsequently ordered the 

parties to state whether additional discovery would be required, but neither party requested such

discovery.4 On November 7, 2019, the ALJ issued the Initial Decision on Remand and dismissed

3 While the Commission case was proceeding, Complainant and intermediary Zhejiang Handsome 

International Logistics Co. Ltd. filed lawsuits against each other in Ningbo Maritime Court in China. 

Complainant’s claims there, like its Shipping Act claims, resulted from Respondent’s release of shipments 

without the original bills of lading. See CFF at 3; Respondent’s Appendix Ex. 7; Complainant’s Appendix 

at 22. The cases settled in May 2018 via a settlement agreement that listed Complainant, Respondent, and 

Zhejiang as parties. I.D.R. at 11; Respondent’s Appendix Ex. 7. Because Complainant has not established 

a § 41102(c) violation, the Commission need not address whether Complainant’s claims are barred by the 

settlement agreement.

4 The Commission’s rules allow parties to “obtain discovery regarding any nonprivileged matter that is 

relevant to any party's claim or defense” using tools such as depositions, interrogatories, document requests,

and requests for admission. 46 C.F.R. §§ 502.141(e), 502.143, 502.145, 502.146, 502.147. A party may 

use subpoenas to obtain evidence from nonparties. 46 C.F.R. § 502.131. 

 170 2 F.M.C.2d 2 F.M.C.2d
the complaint and counterclaim. No exceptions were filed, and the Commission determined to 

review the decision. 

II. DISCUSSION

 In the Initial Decision on Remand, the ALJ found that Complainant failed to establish 

that Respondent’s conduct occurred on a normal, customary, and continuous basis for purposes 

of 46 U.S.C. § 41102(c) and 46 C.F.R. § 545.4. The ALJ also found that Respondent’s 

counterclaim did not make out a Shipping Act violation. The Commission agrees. 

A. Standard of Review and Burden of Proof

Under 46 C.F.R § 502.227(a)(6), the Commission has the same powers on review of an 

initial decision that it would have in making the initial decision. The Commission thus reviews 

the Initial Decision on Remand de novo.

5

 The Complainant has the burden of proof on its 

claims. 5 U.S.C. § 556(d) (“Except as otherwise provided by statute, the proponent of a rule or 

order has the burden of proof.”); 46 C.F.R § 502.203; Exclusive Tug Franchises – Marine 

Terminal Operators Serving the Lower Mississippi River, 29 S.R.R. 718, 719 (ALJ 2001) (“The 

Commission’s rule, consistent with the Administrative Procedure Act (APA), provides quite 

clearly that ‘the burden of proof shall be on the proponent of the rule or order.’”) (citation 

omitted). Respondent bears the burden of establishing its counterclaim. Maher Terminals, LLC v. 

The Port Authority of New York and New Jersey, 33 S.R.R. 821, 855 (FMC 2014). 

B. Complainant’s § 41102(c) Claim 

 Section 41102(c) of Title 46 provides that “[a] common carrier, marine terminal operator, 

or ocean transportation intermediary may not fail to establish, observe, and enforce just and 

reasonable regulations and practices relating to or connected with receiving, handling, storing, or 

delivering property.” To establish a claim for reparations under § 41102(c), a complainant must 

prove that: 

(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.

5 The ALJ made 26 findings of fact in the I.D.R. These facts are supported by the record, and the 

Commission adopts them. 

 171 2 F.M.C.2d 2 F.M.C.2d
46 C.F.R. § 545.4; see also Final Rule: Interpretive Rule, Shipping Act of 1984, 83 Fed. Reg. 

64478 (Dec. 17, 2018); Notice of Proposed Rulemaking: Interpretive Rule, Shipping Act of 

1984, 83 Fed. Reg. 45367 (Sept. 7, 2018). 

The focus of the inquiry on remand was whether Respondent’s conduct occurred on a 

normal, customary, and continuous basis. Hangzhou, 1 F.M.C.2d at 262. Complainant contended 

that releasing three shipments that were transported on three different vessels on three separate 

occasions without the original bills of lading or its permission was sufficient to satisfy the 

normal, customary, and continuous element. Complainant’s Remand Br. at 1 (“The fact that they 

released three of our shipments on different dates from different vessels without our knowledge 

should speak for itself.”); see also id. (“They were not released together as a group which would 

indicate 1 action. They were released separately, 3 separate times.”). 

The ALJ on remand was not persuaded. I.D.R. at 14-15.6 The ALJ reasoned that:

As the entity who filed this complaint, Hangzhou Qianwang has the burden to 

establish that the unjust and unreasonable acts in question occurred on a normal, 

customary, and continuous basis and thus was a “regulation or practice” by RDD 

Freight. However, the record does not support a finding that RDD “releases 

freight without original bills of ladings on a regular basis,” as alleged by 

Hangzhou Qianwang. The evidence shows that Hangzhou Qianwang entered into 

a contract with RDD Freight calling for RDD Freight to transport cargo to an 

identified consignee in three separate shipments and that RDD Freight unjustly 

and unreasonably delivered the cargo to that consignee without obtaining the 

original bills of lading for the cargo or Hangzhou Qianwang's permission to do so. 

As such, the evidence solely demonstrates unjust and unreasonable actions by 

RDD Freight with regard to the delivery of the cargo in these three shipments, not 

unjust and unreasonable acts on other occasions involving different transportation 

agreements, shippers, or consignees. Thus, the evidence of unjust and 

unreasonable acts by RDD does not rise to a level constituting a “regulation and 

practice” as described by the Commission. 

Id. 

The ALJ also pointed out that Complainant’s speculation that Respondent might have 

acted similarly regarding “other clients past and present” was insufficient to prove normal, 

customary, and continuous conduct. Id. The ALJ noted that there was “no evidence of other 

instances in which cargo was released without the original bill of lading or consent of the 

shipper.” Id. Similarly, the ALJ found, there was “no evidence that the practice continued once 

RDD Freight was alerted to the problem.” Id. The ALJ ultimately concluded that Complainant 

had “not established that there was a practice as opposed to an incident limited to these particular 

shipments between this shipper and this consignee.” Id.

6 Although the ALJ determined that Complainant had not established “normal, customary, and continuous” 

conduct, the ALJ found that Complainant had proved the other four elements of a § 41102(c) claim for 

reparations. I.D.R. at 13-17. The Commission affirms the findings on these elements. 

 172 2 F.M.C.2d 2 F.M.C.2d
The ALJ correctly found that the conduct here did not satisfy the “normal, customary, 

and continuous” element of § 41102(c). Complainant demonstrated that over the course of two 

months, Respondent released three of Complainant’s shipments to the same consignee without 

obtaining the original bill of lading or Complainant’s consent. The conduct occurred over two 

months (September and October 2016), with respect to three shipments, under one contract, and 

involved one shipper and one consignee. 

 The evidence does not establish that it was “normal” for Respondent to release cargo 

without the original bill of lading or Complainant’s consent. Rather, Respondent’s employee was 

induced into releasing the shipments by an employee of SWAK Kids. I.D.R. at 10. Although 

there is no intent requirement for § 41102(c), Volkswagenwerk Aktiengesellschaft v. Fed. Mar. 

Comm’n, 390 U.S. 261, 281 (1968) (“[T]he question of reasonableness under § 17 does not 

depend upon unlawful or discriminatory intent.”), that Respondent was apparently misled is 

relevant to whether its conduct was “normal.” 

Additionally, releasing three shipments of one shipper to one consignee over two months 

does not appear to be “customary” or “continuous” conduct, at least as those words are typically 

understood. Nor is there evidence that Respondent’s conduct was “often repeated,” “systematic,” 

“uniform,” and “habitual.” See Final Rule, 83 Fed. Reg. at 64479. The absence of evidence that 

Respondent unreasonably released the shipments of other shippers is also significant. See 83 Fed. 

Reg. at 64479 (noting that the Commission’s interpretation of § 41102(c) in the Final Rule 

“returns the Commission’s focus and priorities to the activities of maritime regulated entities that 

negatively affect the broader shipping public”); Whitam v. Chicago, R.I. & P.R. Co., 66 F. Supp. 

1014, 1017 (N.D. Tex. 1946) (finding significant, in interpreting the term “practice,” that 

plaintiff alleged “an individual matter between himself and the defendants”);7 see also id. (“As

far as plaintiff’s pleadings go, no other shipper was mentioned or involved.”).8

 Commission precedent also indicates that the conduct here falls short of violating § 

41102(c). In interpreting § 41102(c), the Commission looks to several pre-2010 cases for 

guidance. 83 Fed. Reg. at 64478-79; 83 Fed. Reg. at 45370 (“In the future, the Commission 

intends to follow the reasoning in Intercoastal Investigation, Altieri, Stockton Elevators, 

European Trade Specialists, Deringer, and Kamara which offer precedent as to what properly 

applies the full meaning and purpose of ‘establish, observe, and enforce just and reasonable 

regulations and practices’ under the Shipping Act and a violation of § 41102(c).”). 

Investigation of Certain Practices of Stockton Elevators, 8 F.M.C. 187 (Examiner 1964) 

aff’d 8 F.M.C. 181 (FMC 1964) (“Stockton Elevators”), is particularly relevant. In that case, 

Stockton Elevators, a grain elevator that operated terminal facilities, in one instance charged a 

customer wharfage at less than the tariff rate. 8 F.M.C. at 193. Additionally, with respect to five 

shipments in the spring and fall of 1961, Stockton Elevators charged the same customer the 

wharfage as set forth in the tariff but subsequently paid the customer an “allowance,” effectively

7 The Commission cited Whitam with approval in the interpretive rule on § 41102(c). 83 Fed. Reg. 64479 

n. 10.

8 The Whitam court also noted that the plaintiff did not allege a “practice” even between himself and the 

defendants. 66 F. Supp. at 1017. 

 173 2 F.M.C.2d 2 F.M.C.2d
defraying the wharfage. Id. at 194-196. This conduct occurred in several months in the spring 

and fall of 1961, and all the shipments were transported in different voyages. Id. at 202. 

The Commission not only found that this conduct was not unjust or unreasonable, but it 

also held that Stockton Elevators had not engaged in a “practice” within the meaning of section 

17 of the Shipping Act of 1916, the predecessor of § 41102(c).9 Id. at 200-01 (“The essence of a 

practice is uniformity. It is something habitually performed and it implies continuity . . . the 

usual course of conduct.”). Rather, these six total instances amounted, in the Commission’s view, 

to an “occasional transaction.” Id. at 201. 

Given that six instances of alleged unreasonable conduct occurring over several months 

was not uniform or continuous enough to make out a violation in Stockton Elevators, it follows 

that Respondent’s conduct, which occurred less frequently and within a shorter time frame, does 

not either. As the ALJ noted, there is no evidence that Respondent released the containers of 

other shippers without original bills of lading. And there is no evidence that Respondent 

continued this conduct once Complainant alerted it to the problem. I.D.R. at 15. Consequently, 

Complaint has not established that Respondent violated 46 U.S.C. § 41102(c). 

 As the ALJ noted, 46 C.F.R. § 545.4 describes the elements required to prove “a 

successful case for reparations” under § 41102(c), but it is silent regarding cease-and-desist 

relief. I.D.R. at 18. To clarify, regardless of the relief sought, for a regulated entity to have 

violated § 41102(c), it must have engaged in unjust or unreasonable conduct related to or 

connected with receiving, handling, storing, or delivering property on a normal, customary, and 

continuous basis. 83 Fed. Reg. at 64478. In other words, a complainant must establish elements 

(a)-(d) of 46 C.F.R. § 545.4 to prove a § 41102(c) violation. To obtain reparations, a complainant 

must also prove that the practice or regulation is the proximate cause of the claimed loss. 46 

C.F.R. § 545.4(e). Because Complainant failed to establish the “normal, customary, and 

continuous” element, it has not proved a violation and thus is not entitled to a cease-and-desist 

order or reparations.10 

C. Respondent’s Counterclaim 

 In its counterclaim, Respondent alleged that “Complainant has conspired with its 

counterparts in a scheme to defraud the Respondent out of monies bonded with the FMC.” 

Answer ¶ 12; Respondent’s Br. at 2 (“RDD has counterclaimed that the Complainant had 

conspired with the said consignee to make RDD pay out of its surety bonds.”). As evidence of 

“collusion,” Respondent noted that “Complainant never tried to collect the said sum of money 

from the Consignee SWAK Kids, nor to even contact them to collect the same.” Respondent’s 

Br. at 2. The ALJ dismissed the counterclaim in both the Initial Decision and the Initial Decision 

on Remand. Hangzhou, 1 F.M.C.2d at 169-170; I.D.R. at 18-20. 

9 Section 41102(c) derives from the second paragraph of section 17 of the Shipping Act of 1916. See 83 

Fed Reg. at 45368. 

10 Further, there is no evidence that Respondent is continuing to release cargo without obtaining the original 

bill of lading, making a cease-and-desist order inappropriate. See I.D.R. at 18; In re Vehicle Carrier Servs., 

1 F.M.C.2d 440, 466 (FMC 2019) (noting that cease-and-desist relief typically requires a showing that 

unlawful conduct is ongoing or likely to resume). 

 174 2 F.M.C.2d 2 F.M.C.2d
The ALJ did not err in dismissing the counterclaim. Under 46 C.F.R. § 502.62(b)(4), a 

counterclaim “must allege and be limited to violations of the Shipping Act.” Cf. Mitsui O.S.K. 

Lines Ltd. v. Global Link Logistics, Inc., Docket No. 09-01, 2011 FMC LEXIS 12, at *33-*34 

(FMC Aug. 1, 2011) (holding that the Commission lacked authority to adjudicate crossclaims 

that did not allege violations of the Shipping Act). Respondent does not allege a Shipping Act 

violation. Fraud, collusion, and conspiracy claims that are not linked to the Act or a Commission 

regulation are not within the Commission’s purview. 

III. CONCLUSION 

For the reasons set forth above, the Commission affirms the Initial Decision on Remand. 

THEREFORE, IT IS ORDERED that Complainant’s complaint be DISMISSED WITH 

PREJUDICE. It is 

FURTHER ORDERED that Respondent’s counterclaim be DISMISSED WITH 

PREJUDICE.

Finally, IT IS FURTHER ORDERED that this proceeding be DISCONTINUED. 

By the Commission. 

 Rachel E. Dickon 

 Secretary

Commissioner MAFFEI, Dissenting: 

I agree with the outcome of the Commission’s majority opinion, but I follow a different 

reasoning to reach that outcome. The case should be dismissed with prejudice and discontinued, 

but not for a failure to state a claim under § 41102(c). The settlement agreement reached by the 

parties provides a more compelling reason to dismiss this case. 

I. Settlement Agreement

During the pendency of this case, the Complainant initiated another case involving these 

shipments in China which was disposed of through a jointly negotiated settlement that purported 

to resolve all disputes between Complainant and Respondent over the shipments, but did not 

specifically mention the Federal Maritime Commission proceeding. By delegating its treatment 

of the settlement agreement reached by the parties to a footnote, the majority overlooks what 

should have been the determinative issue in this case. 

The ALJ considered whether the settlement agreement should apply in this proceeding, 

barring the Complainant from continuing to pursue the case against the Respondent. In both the 

 175 2 F.M.C.2d 2 F.M.C.2d
Initial Decision, and the Initial Decision on Remand, she determined that because the agreement 

had not been reviewed and approved by the Commission, it was not applicable and did not 

resolve the case. However, in the Initial Decision, she offset the reparations award by the amount 

of the Chinese settlement, to avoid resulting in “double damages.” 1 F.M.C.2d 158, 172 (ALJ 

2018). If there was sufficient evidence to consider the award as a factor when calculating 

damages, it seems that it should be sufficient to consider it to resolve the case. 

The situation is no different than if litigants in federal court settled their claims, included 

a general release in the settlement agreement, and filed the settlement agreement with the federal 

court such that the federal court retained jurisdiction to enforce the settlement agreement. In 

Baltic Auto Shipping, Inc. v. Hitrinov, Docket No. 14-15, 2015 FMC LEXIS 26 (ALJ Sept. 15, 

2015), the Commission allowed such a settlement to be raised as a defense. There, the 

complainant filed a complaint in federal district court in New Jersey alleging violation of the 

Shipping Act and other causes of action. Id. at *4-*6, *9-*17. The case settled shortly thereafter. 

Id. at *17-*19. The settlement agreement contained a general release and provided that the 

federal court would retain jurisdiction over it. Id. at *68-*69. In a later Shipping Act proceeding, 

the ALJ found that by signing the settlement agreement, the complainant released or waived its 

claim for reparations under the Shipping Act. Id. at *110, *116-*118. 

There appears no reason to treat settlement agreements that settle foreign disputes and are 

filed with a foreign court any differently than their federal court equivalent for purposes of 

determining whether a complainant has released or waived its claims via the settlement. 

Typically, when parties settle, they move jointly to dismiss the Shipping Act proceeding 

before the Commission and submit their settlement agreement for approval; and in fact, the 

Commission’s regulations require Commission approval when a complainant moves to dismiss a 

case based on a settlement agreement. 46 C.F.R. § 502.72(a)(3). The presiding officer considers 

“whether the settlement appears to violate any law or policy” and ensures it is “free of fraud, 

duress, undue influence, mistake, or other defects which might make it unapprovable.” Id. 

The case law and regulations do not address what happens when the parties do not jointly 

seek dismissal of a case, but rather a respondent argues as a defense that a complainant has 

released its Shipping Act claims in a settlement that has not previously been submitted and 

approved by the Commission. Failure to submit a settlement for Commission approval does not 

necessarily render it invalid, unenforceable, or otherwise irrelevant as part of a release or waiver 

defense in Commission proceedings. 

In cases where a respondent raises a release of claims as a defense, the appropriate 

approach is to first determine whether the settlement agreement or release applies to the 

complainant’s Shipping Act claims. If it does not, the inquiry ends. If the settlement agreement 

or release covers Shipping Act claims, the Commission can then make the determination it 

would have made had the parties submitted the settlement under § 502.72: 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. It is true that the latter task is made more 

difficult when one party argues the settlement is not applicable, but it is not impossible. 

 176 2 F.M.C.2d 2 F.M.C.2d
In this case, the evidence indicates that the settlement agreement is applicable to the 

claims brought in the present case, and that it does not violate any law or policy and appears to 

be free of fraud, duress, undue influence, mistake, or other defects. Accordingly, the 

Complainant has waived the Shipping Act claims raised in this case.

Failing to give effect to releases in settlement agreements when parties do not jointly 

submit the agreement for Commission review gives a complainant the incentive to settle, receive 

payment, and then renege on the agreement and continue pursuing Shipping Act claims. It is 

important that the Commission avoid this absurd result and make clear that settlement 

agreements can be raised as a defense in Commission proceedings. By delegating this issue to a 

footnote and not reaching the issue, the majority misses an important opportunity to clarify how 

the Commission will consider settlement agreements in this situation. 

II. Interpretive Rule

Because the case can be resolved on the settlement agreement issue, the Commission 

should not reach the § 41102(c) issue. However, because the majority opinion centers on this 

issue, I must take this opportunity to address it. 

My disagreement with the interpretive rule on unjust and unreasonable regulations and 

practices is well‐documented (particularly in the concurrence I authored in Gruenberg‐Reisner v. 

Overseas Moving Specialists, Docket No. 1947(I), 2017 FMC LEXIS 9 (FMC 2017). While I 

believe the Commission need not revisit the issue of the interpretation of § 41102(c) in this case, 

it does illustrate some of the practical concerns I have regarding the Commission’s current 

interpretation.

Respondent released cargo without a proper bill of lading or Complainant’s permission 

on three separate instances. These three separate instances could be evidence of unreasonable 

conduct that is occurring on a normal, customary, and continuous basis in violation of § 

41102(c). However, that is not how the ALJ and the majority currently see it. This brings up 

several questions: If three separate instances are not enough then how many will be? Is there a 

requirement (not fulfilled by Complainant in this case) that there be more than one shipment? If 

so, how many shipments and over how long a duration of time? Is there a requirement that the 

unreasonable conduct affect more than one of the respondent’s customers? Is demonstrating two 

aggrieved parties enough or is that still not sufficient to show unreasonable conduct is occurring 

on a normal, customary, and continuous basis? If not two, three? 

The point is that, in short order, the burden on a complainant of proving that 

unreasonable conduct is occurring on “a normal, customary, and continuous basis,” becomes 

excessive. As noted by Complainant, and those in other Commission cases, engaging in 

discovery to prove a respondent mistreated other parties in a similar way may not be feasible and 

is often cost‐ prohibitive. Complainant noted in their remand brief that they have no access to 

Respondent’s books and records to assist in proving the normal, customary, and continuous 

nature of Respondent’s behavior or even to assist in formulating lines of inquiry to pursue 

through discovery. Similarly, in the recently dismissed small claims case brought by M/S 

Parsons Overseas, the complainant sought a voluntary dismissal because the expense of 

 177 2 F.M.C.2d 2 F.M.C.2d
continuing to litigate the case in order to prove the unreasonable contact occurred on a normal, 

customary, and continuous basis was too onerous. M/S Parsons Overseas v. Seven Seas Shipping 

USA, Inc., Docket No. 1960(I), Order Granting Voluntary Dismissal, slip op., at 2. (ALJ Feb. 26, 

2020). 

The interpretive rule indicates that the Commission’s goal was to return its “focus and 

priorities to the activities of maritime regulated entities that negatively affect the broader 

shipping public.” Final Rule: Interpretive Rule, Shipping Act of 1984, 83 Fed. Reg. 64478, 

64479 (Dec. 17, 2018). I concur with this goal but, at the same time, I am concerned that the 

normal, customary, and continuous standard, as applied in the majority opinion, creates a 

substantial deterrent for parties to ever bring a claim under § 41102(c). 

While my disagreement with the interpretive rule is well-known, I have voted with the 

majority when the interpretive rule is applied to a case in order to ensure consistent handling of 

cases so long as the interpretive rule remains in effect. The challenge in this case, as stated 

above, is that the interpretive rule gives insufficient guidance as what circumstances constitute an 

action performed on a “normal, customary, and continuous basis.” By determining this case on 

the basis of whether a claim was stated under § 41102(c), the majority declares that three 

instances is not enough to be “normal, customary, and continuous basis” but does nothing to 

clarify what would meet that standard or how a Complainant would ever move forward in 

discovery to obtain evidence of more instances if they did exist. In my view, this order does not 

merely apply the interpretive rule, it further narrows the definition of “normal, customary, and 

continuous basis” in a manner I cannot support and in a manner unnecessary for determining this 

case.

I urge the Commission to consider changing or clarifying the interpretive rule on § 

41102(c) in the near future. In any event, Congress should also consider revising the awkward 

language contained in § 41102(c) that has led to such confusion about how to interpret it. 

 

 178 2 F.M.C.2d 2 F.M.C.2d
FEDERAL MARITIME COMMISSION

Office of Administrative Law Judges

AENEAS EXPORTING LLC, Complainant

v. 

CARLO SHIPPING INTERNATIONAL, INC., Respondent. 

DOCKET NO. 20-11 

Served: September 29, 2020 

BEFORE: Erin M. WIRTH, Chief Administrative Law Judge. 

INITIAL DECISION APPROVING SETTLEMENT AGREEMENT1

I. Introduction

On August 11, 2020, Complainant Aeneas Exporting LLC (“Aeneas Exporting”) filed a 

request for dismissal (“motion”) pursuant to settlement of the complaint filed against Respondent 

Carlo Shipping International, Inc. (“CSI”). Complainant attached a copy of a July 28, 2020, 

email outlining settlement terms. Complainant requested approval of the settlement terms and 

dismissal with prejudice, although Complainant noted that the parties were “unable to reach an 

agreement regarding the outstanding demurrage charges and related penalties,” so that “no final 

settlement agreement with releases was signed.” Motion at 2. 

In response to an order, on September 9, 2020, the parties filed a joint status report 

(“JSR”) which stated that the 24 containers at issue had been released to Complainant and that 

the payment identified in the settlement had been made to Respondent although some demurrage 

charges remained and mutual releases between the parties had not been signed. JSR at 1-4. 

As discussed below, the parties presented an enforceable settlement agreement upon 

which both parties relied and substantially performed. It is not necessary for mutual releases to 

be signed or for issues not raised in a settlement agreement to be resolved before a settlement 

agreement can be approved. Accordingly, the settlement agreement will be approved. 

II. Procedural History

On July 22, 2020, Aeneas Exporting filed a complaint alleging violations of the Shipping 

Act, including that CSI violated 46 U.S.C. §§ 41102(c) and 41104(a)(3), and seeking damages 

accrued due to an increase in shipping rates and subsequent detention of 24 of Aeneas 

Exporting’s shipping containers in Benghazi, Libya. See Complaint at 6-7. 

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. 

 179 2 F.M.C.2d 2 F.M.C.2d
On August 11, 2020, Complainant filed a request for dismissal pursuant to settlement and 

stated that in order to ensure the release of its 24 containers, Aeneas agreed to dismiss this 

proceeding along with a related federal lawsuit filed in the District of New Jersey. Motion at 1. 

Attached to the motion was an email dated July 28, 2020, outlining an agreement between the 

parties, which stated: 

1. CSI will release the 24 containers listed below (from the previous agreement) 

and provide copies of the Sea Way bills within 72 hours of the acceptance of this 

agreement. [List of 24 vehicles included.] 

2. Aeneas will release $20,000 from the escrow today and the remaining $20,000 

when CSI has provided Aeneas with Sea Waybills for the remaining fourteen 

containers on the list and assurances from Hapag-LLoyd and CMA CGM that all 

USA special charges have been satisfied on these containers.

3. CSI is responsible for paying any special charges, including demurrage, etc. 

owed in the USA. 

4. Aeneas will remove the untitled vehicles from the CSI facility in Elizabeth, NJ 

within a week, and agrees to pay $20 a day storage fee for any vehicles still present 

more than seven days after this agreement is finalized.

5. Aeneas will dismiss the federal maritime complaint it filed against CSI and the 

case filed in the New Jersey District Court with prejudice upon completion of 

CSI’s obligations as laid out in paragraphs 1 and 2, within 48 hours of such 

completion. 

6. When both sides perform their obligations, they will exchange mutual releases 

so there can be no further claims about any pending claims Aeneas has against CSI 

has with Aeneas [sic] or involving the vehicles. 

Motion, Exhibit A at 1-2. 

On August 24, 2020, an Order was issued requiring the parties to submit a joint status 

report addressing the status of the 24 containers, whether Complainant had paid outstanding 

charges to Respondent, whether the parties had reached agreement regarding the outstanding 

demurrage charges and penalties, as well as whether mutual releases had been exchanged and 

signed, and if not, whether dismissal without prejudice would be more appropriate. Order Requiring 

Joint Status Report at 2. 

On September 9, 2020, the parties submitted a joint status report which stated that the 24 

containers at issue had been released to Complainant and that the payment identified in the 

settlement had been made to Respondent. However, the parties indicated that there remained a 

dispute regarding demurrage charges and whether or not a global settlement had been reached. 

JSR at 1-3. Mutual releases between the parties have not been signed. JSR at 4.

 180 2 F.M.C.2d 2 F.M.C.2d
III. Discussion

A. Relevant Law 

Using language borrowed in part from the Administrative Procedure Act,2 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)).

“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 

2 “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). 

 181 2 F.M.C.2d 2 F.M.C.2d
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)). 

When presented with a settlement and asked to enforce it, a court must first determine if

a binding agreement was actually reached and, if so, what that contract provides. Wood v.

Virginia Hauling Co., 528 F.2d 423, 425 (4th Cir. 1975). “A settlement agreement is treated as

any other contract for purposes of interpretation.” United Commercial Ins. Serv., Inc. v.

Paymaster Corp., 962 F.2d 853, 856 (9th Cir. 1992). The determination of whether parties have 

entered into a binding settlement agreement is governed by the general principles of contract 

law. Schwartz v. Florida Bd. of Regents, 807 F.2d 901, 905 (11th Cir. 1987). “Thus, there must 

be an offer, acceptance, and consideration, as well as a meeting of the mind on all essential 

terms.” PNC Bank, N.A. v. Rolsafe Int’l, LLC, 477 B.R. 884, 902 (Bankr. M.D. Fla. 2012). 

Among the most reliable indicators of intent is performance. The court will be 

more willing to find that an apparently incomplete agreement was in fact 

complete where the parties have already rendered some substantial performance 

or have taken other material action in reliance upon their existing expressions of 

agreement. The fact that they have so acted is itself a circumstance bearing upon 

the question of completeness of their agreement.

1 Corbin on Contracts § 2.9 n.5 (2020) citing Fontainebleau Hotel Corp. v. Crossman, 286 F.2d 

926 (5th Cir. 1961). 

B. Arguments of the Parties

In the motion requesting approval of the settlement agreement, Complainant states:

In order to ensure the release of its 24 containers, continued detention of which 

threatened to put Aeneas out of business, Aeneas agreed to dismiss this 

proceeding, as well as a related federal lawsuit filed in the District of New Jersey 

(the “Federal Suit”), and to pay Respondent a sum of $40,000. . . . Because the 

parties were unable to reach an agreement regarding the outstanding demurrage 

charges and related penalties, no final settlement agreement with releases was 

signed. As a result, the parties have not agreed to fully release each other from all 

potential claims, allegations, or causes of action.

Motion at 1-2. 

 182 2 F.M.C.2d 2 F.M.C.2d
 Attached to the motion was an email dated July 28, 2020, from Complainant’s counsel to 

Respondent outlining the settlement terms. The email identified the 24 vehicles to be released 

and the terms of payment. The email stated that “[w]hen both sides perform their obligations, 

they will exchange mutual releases so there can be no further claims about any pending claims 

Aeneas has against CSI has with Aeneas [sic] or involving the vehicles.” Exhibit A at 2. Neither 

the motion nor the exhibit was signed by Respondent. 

The joint status report indicates that the vehicles at issue have been released and that the 

negotiated compromise payment was made but that there is not an agreement as to demurrage 

charges in Libya. Complainant states:

As a result of Respondent’s months-long detention of Claimant's 24 containers, 

approximately $60,000 in demurrage charges and penalties has been incurred in 

Benghazi, Libya. On or about July 28, 2020, Respondent committed to making a 

“good-faith effort” to have those charges reduced or waived. However, on 

August 6, 2020, Respondent, through its attorney, informed Claimant that it 

would no longer make any efforts to have those charges reduced or waived and 

that Claimant would have to deal with the charges itself. The amount of the 

Libyan charges and penalties exceeds the entire settlement payment Claimant 

made to Respondent for release of the 24 containers. 

JSR at 2-3. Regarding mutual releases, Complainant asserts:

No, mutual releases have not been exchanged or signed. While Claimant did agree 

to dismiss this action-along with a related federal case in New Jersey-with 

prejudice in exchange for release of the 24 containers, Claimant expressly 

reserved its right to bring suit for Respondent's breach of the July 17 Settlement 

Agreement. Because Respondent refused to include carve-out language in the 

releases for breach of the July 17 Settlement Agreement, the parties were not able 

to finalize or execute mutual releases. Nevertheless, Claimant sought dismissal of 

this action with prejudice in accordance with the July 28, 2020 Settlement Terms. 

Claimant does not intend to waive or release its right to seek damages for 

Respondent's breach of the July 17, 2020 Settlement Agreement. 

While Claimant would agree to dismiss this action without prejudice and concurs 

that such dismissal would be appropriate, the July 28, 2020 Settlement Terms 

require it to seek dismissal with prejudice. In any event, Claimant intends to 

initiate a new proceeding at some future date based on Respondent’s breach of the 

July 17 Settlement Agreement. 

JSR at 4.

Respondent asserts: 

Before the motion to dismiss this case was filed, we reached an agreement and 

later reached a revised agreement that also included the removal of several 

unregistered vehicles that Aeneas had left at my warehouse for several months 

without paying any storage fees. I asked Hapag-Lloyd to waive or reduce their 

 183 2 F.M.C.2d 2 F.M.C.2d
Libyan fees for the Aeneas cargo. I agreed to pay all charges in the US, and 

Aeneas agreed to pay the charges in Libya. This is all I agreed to do about the 

demurrage charges and related penalties under either agreement.

As part of the revised agreement, we were both supposed to sign a release so there 

would be no further litigation about any pending claims between us or involving 

the vehicles. After I signed the release, Aeneas claimed for the first time that he 

would not sign the release unless he could keep the right to sue me based on the 

original settlement. I would not have released the Aeneas cargo or let Aeneas 

remove the vehicles from my warehouse if I knew Aeneas planned to sue me 

again. This case should be dismissed and Aeneas should be barred from raising 

any claims about the 24 containers or destination fees. Aeneas would not have 

owed so many fees if it had paid me what it owed me back in February. We 

agreed on a global settlement and this case should be dismissed.

JSR at 3. Regarding mutual releases, Respondent states:

No. Respondent signed a proposed settlement agreement with mutual releases. 

Complainant seeks to retain certain [sic] a claim arising out of an alleged breach 

of a settlement agreement, and will not sign unless he retains the right to pursue 

that claim. Respondent relied on Complainant's representation that global mutual 

releases would be signed when he performed under the revised settlement 

agreement. A dismissal with prejudice is appropriate.

JSR at 4.

C. Analysis 

The settlement terms attached to the motion in an email were not signed or clearly 

acknowledged by both parties. However, it appears that the July 28, 2020, email lists the terms to 

which both sides agreed and neither side has raised any objections to the accuracy of the terms 

listed in the email. So, the lack of signature or more formal written agreement does not pose a 

bar to approving the settlement.

It appears that both parties agreed to the terms of the July 28, 2020, email. Moreover, it 

appears that both parties acted in reliance on the agreement and performed their obligations 

under the agreement, except for the failure to exchange mutual releases. Specifically, the email 

indicates that Respondent must provide assurances “that all USA special charges have been 

satisfied on these containers” and that Respondent “is responsible for paying any special charges, 

including demurrage, etc. owed in the USA.” Motion, Exhibit A at 1. The July 28, 2020, email 

does not address demurrage charges in Libya, which is the subject of the current dispute, which 

suggests that resolution of that issue was not an essential term of the settlement. In addition, it is 

not clear that there was a meeting of the minds necessary for the July 17, 2020, terms and those 

terms were not part of the settlement motion. 

 184 2 F.M.C.2d 2 F.M.C.2d
The filings demonstrate that the parties agreed to the July 28, 2020, terms and that the 

parties have substantially completed their obligations under that agreement. Both parties 

benefited from the settlement agreement and both parties support the request for dismissal of the 

proceeding. While the settlement appears appropriate, out of an abundance of caution, the 

dismissal will be without prejudice. 

Accordingly, 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 

proceeding is at an early stage and would require potentially expensive additional discovery and 

briefing. The parties have determined that the settlement reasonably resolves the primary issues 

raised in the complaint without the need for costly and uncertain litigation. There is no evidence 

of fraud, duress, undue influence, or mistake nor harm to the public. 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 July 28, 2020, settlement between Aeneas 

Exporting LLC and Carlo Shipping International, Inc. be GRANTED. It is 

FURTHER ORDERED that this proceeding be DISMISSED WITHOUT

PREJUDICE. 

 

 Erin M. Wirth

Chief Administrative Law Judge 

 185 2 F.M.C.2d 2 F.M.C.2d
FEDERAL MARITIME COMMISSION

NOTICE OF INQUIRY – VESSEL-OPERATING COMMON 

CARRIER DEFINITION AND APPLICATION OF THE TERM 

“MERCHANT” IN BILLS OF LADING

DOCKET NO. 20-16 

Issued: October 7, 2020 

AGENCY: Federal Maritime Commission 

ACTION: Notice of Inquiry 

SUMMARY: The Federal Maritime Commission (“FMC” or “Commission”) is issuing this 

Notice of Inquiry (“NOI”) to solicit public comment on the practice of vesseloperating common carriers (VOCCs or carrier) defining “Merchant" in their bills 

of lading to apply to persons and entities with whom the VOCCs may not be in 

contractual privity. Generally, the Commission seeks public comment as to 1) 

how VOCCs apply the term “Merchant” in their bills of lading; 2) whether the 

definition, as applied, subjects third parties who are not in contractual privity 

with the carrier to joint or several liability; and 3) whether carriers have enforced 

the definition of merchant against third parties that have not consented to be 

bound by, or otherwise accept, the terms and conditions of the bill of lading. 

DATES: Submit comments on or before November 6, 2020. 

ADDRESSES: 

Submit comments to: 

Rachel E. Dickon, Secretary 

Federal Maritime Commission

secretary@fmc.gov

(email comments at attachments preferably in MS Word or PDF) 

800 North Capitol Street, N.W. Room 1046 

Washington, D.C. 20573-0001 

Phone: 202-523-5725 

FOR FURTHER INFORMATION CONTACT: 

 186 2 F.M.C.2d 2 F.M.C.2d
Benjamin K. Trogdon, Director, and 

Cory Cinque, Trial Attorney 

Bureau of Enforcement 

Federal Maritime Commission 

800 North Capitol Street, N.W

Washington, D.C. 20573-0001 

Phone: 202-523-5783 

E-mail: btrogdon@fmc.gov and ccinque@fmc.gov

 

SUPPLEMENTARY INFORMATION: 

Submit Comments: Comments may be submitted by e-mail as an attachment (preferably in 

Microsoft Word or PDF) addressed to secretary@fmc.gov on or before November 6, 2020. 

Include in the subject line: “Response to FMC NOI – Merchant Clause.” The Commission will 

provide confidential treatment for comments received to the extent permitted by law and will not 

post comments to the public docket. Questions regarding filing or treatment of confidential 

responses to this inquiry should be directed to the Commission’s Secretary, Rachel E. Dickon, at 

the telephone number or e-mail provided above. This NOI will be made available via the Federal 

Register and on the Commission’s web-site at www.fmc.gov. 

Background: 

 

The Commission has received information from shipping industry participants that 

VOCCs have defined “merchant” in their respective bills of lading to include persons or entities 

who have no beneficial interest in the cargo, but rather are providing service as third parties on 

behalf of someone specifically identified on the bill of lading. The concerns expressed indicate 

that VOCCs may be enforcing the terms of the bill of lading (including, without limitation, 

collection of freight rates and charges, equipment charges, detention and demurrage charges) 

jointly and severally against entities that are not party to, and have not agreed to be bound by the 

bill of lading. The Commission has been advised by third-party logistics providers, harbor 

truckers, stevedores, customs brokers and freight forwarders, many of whom have no connection 

to the cargo or the shipment, other than providing service to entities that may own or have a 

proprietary interest in the cargo covered by a VOCC bill of lading, that VOCCs seek payment 

from such third parties for rates and charges pursuant to the terms and conditions of the bill of 

lading. Allegations have also been received that VOCCs threaten to discontinue allowing such 

third parties to provide service for future shipments unless amounts due on current shipments are 

paid. 

This issue was raised in Docket No. 19-05, Interpretive Rule on Demurrage and 

Detention Under the Shipping Act by several commenters, including the New York New Jersey 

Freight Forwarders and Customs Brokers, the National Customs Brokers and Freight Forwarders 

Association, the Agricultural Transportation Coalition, as well as other industry participants 

since the issuance of the Final Rule. As noted in the Final Rule, “the Commission’s emphasis in 

the NPRM that ocean carriers bill the correct party reflected concerns raised by truckers that they 

were being required to pay charges that were more appropriately charged to others.” 85 FR. 

29638, at 29662 (May 18, 2020). Several commenters reiterated these concerns. AgTC 

 187 2 F.M.C.2d 2 F.M.C.2d
contended that ‘‘carriers should impose detention and/or demurrage on the actual exporter or 

importer customer with whom the carrier has a contractual relationship.’’ The New York New 

Jersey Foreign Freight Forwarders & Brokers Association asserted that VOCCs define the term 

‘‘merchant’’ in their bill of lading too broadly, resulting in parties being billed for demurrage and 

detention ‘‘regardless of whether they are truly in control of the cargo when the charges were 

incurred.’’ Id. 

The Commission clarified that one of its goals for the Interpretive Rule “was to 

emphasize the importance of ocean carriers and marine terminal operator bills aligning with 

contractual responsibilities.” Id. In doing so, the Commission noted that it “does not believe it is 

appropriate in this interpretive rule to prescribe” specific billing practices, or to address the 

application of the merchant definition as it related to such practices. Id. The Commission 

further noted it would address such issues in the context of particular facts, considering all 

relevant arguments. Although the Commission incorporated reference to certain billing practices 

and regulations in the Final Rule, it declined to prescribe specific billing practices or regulations 

which would be deemed reasonable under 46 U.S.C. 41102(c). 

General contract law principles provide that one party cannot enforce a contract against 

another who did not assent to be bound by its terms and conditions. This can include situations 

where one party attempts to bind another party with unilaterally defined terms. Accordingly, the 

Commission has determined to request public comment on the manner in which VOCCs are 

defining the term “Merchant” and enforcing that definition in their bills of lading. 

The purpose of the inquiry is to determine whether such carrier enforcement (i.e., seeking 

to collect freight and other charges) is unfairly or unjustly wielded against third parties who have 

not directly contracted with the VOCC nor assented to be bound by the contract of carriage. The 

Commission encourages all interested parties, including VOCCs, shippers, ports, maritime 

terminal operators, ocean transportation intermediaries, truckers, stevedores or customs brokers 

to submit comments or to identify information relevant to the manner in which VOCCs have 

applied their respective definitions of “Merchant.” As part of this NOI, the Commission will 

also be contacting certain VOCCs to provide information about the manner in which they have 

defined and applied their definition of a “Merchant.” 

The Commission will consider relevant comments submitted by any party. Along with 

comments, commenters should provide their name, title/position, contact information (e.g., 

telephone number and/or e-mail address), name and address of the company or other entity and 

the type of company or entity (e.g., carrier, exporter, importer, trade association, etc.). 

Responses to the NOI will help the Commission ascertain more precisely the practices of 

VOCCs, including whether they may be imposing liability on entities who may not have assented 

to be bound to the terms and conditions of a VOCC’s bill of lading, and in determining whether 

additional analyses or action by the Commission may be necessary. 

 

By the Commission. 

 

 

 188 2 F.M.C.2d 2 F.M.C.2d
Rachel Dickon

Secretary 

 189 2 F.M.C.2d 2 F.M.C.2d
FEDERAL MARITIME COMMISSION

PETITION OF CMA CGM S.A.,

AMERICAN PRESIDENT LINES, LLC,

APL CO. PTE. LTD. AND ANL

SINGAPORE PTE LTD FOR A 

TEMPORARY EXEMPTION FROM 

STANDARD TARIFF & SERVICE 

CONTRACT FILING REQUIREMENTS

 

 

 Petition No. P2-20 

 

Served: October 20, 2020

BY THE COMMISSION: Michael A. KHOURI, Chairman, Rebecca F. DYE, Daniel B. 

MAFFEI, Louis E. SOLA, Carl W. BENTZEL, Commissioners.

ORDER GRANTING IN PART AND DENYING IN PART PETITION FOR EXEMPTION

The CMA Group1 filed a petition with the Commission seeking an exemption from 

certain service contract filing and tariff publishing requirements because of a recent cyberattack 

on their information technology systems. For the reasons described below, the Commission 

grants the request for exemption from the relevant service contract filing requirements subject to 

certain conditions. The Commission also grants the request for exemption from the relevant tariff 

publishing requirements, subject to certain conditions, with respect to cargo received on or after 

the date of this order. But because the Commission’s exemption authority is limited to 

prospective relief, the Commission denies the request for exemption from the relevant tariff 

publishing requirements for cargo received prior to the date of this order. Instead, the CMA 

Group may use other procedures provided by the Shipping Act that allow them to refund or 

waive collection of freight charges for these shipments due to failure to publish a tariff.

I. BACKGROUND

The petitioners are all ocean common carriers under the Shipping Act of 1984, 46 U.S.C. 

§ 40101 et seq. (Shipping Act). See 46 U.S.C. § 40102(18). The CMA Group states that it 

suffered a malicious cyberattack that began affecting its information systems on September 27, 

2020. Pet. at 2. The CMA Group discovered the attack on September 28, 2020. Id. The attack has 

impacted the CMA Group’s ability to timely file service contracts and amendments and to timely 

publish tariff rates and rules. Id. The CMA Group provided several examples of these impacts. 

1 The petitioners include CMA CGM S.A., American President Lines, LLC, APL Co. Pte. Ltd., and ANL 

Singapore Pte Ltd, collectively referred to as “the CMA Group.”

 190 2 F.M.C.2d 2 F.M.C.2d
 

Specifically, American President Lines, LLC and APL Co. Pte. Ltd. (collectively “APL”) and 

CMA CGM S.A. have new service contracts and amendments effective October 1, 2020. Id. at 3. 

In addition, APL has been unable to update the rates and rules in its self-published tariff,

2

 and 

although CMA CGM S.A. and ANL Singapore Pte Ltd use a third-party tariff publisher that was 

not impacted by the cyberattack, the carriers are unable to access quotes given to customers in 

order to convert them into tariff line items so that customers can book shipments under the 

quoted rates. Id. at 2-3. 

On October 7, 2020, the CMA Group petitioned the Commission for an exemption from 

the service contract filing and tariff publishing requirements. With respect to service contracts, 

the CMA Group requests exemption from 46 C.F.R. §§ 530.3(i), 530.8(a), and 530.14(a) to allow 

them to apply service contract rates and terms agreed to with their customers but not yet filed 

with the Commission, provided those service contracts and amendments are filed by November 

26.3 Id. at 1, 3.

With respect to tariffs, the CMA Group requests exemption from 46 C.F.R. §§ 520.7(c), 

520.8(a)(1), and 520.8(a)(4)4 to apply tariff rates, charges, and rules communicated to customers

but not yet published, provided that these tariff changes are published by November 26, 2020. Id. 

at 1-3. The CMA Group states that they would not implement any increases to tariff rates or 

charges under the exemption absent an alternate form of written 30-day notice clearly 

communicated to customers. Id. at 2.

The CMA Group requests that the exemption apply to cargo received on or after 

September 27, 2020. Id. at 1, 3. The CMA Group asserts that this flexibility will allow them to 

apply service contract rates agreed upon with customers and tariff terms offered to customers for 

shipments received before service contract filing or tariff publication can be accomplished, 

instead of requiring customers to pay higher tariff rates due to the CMA Group’s inability to 

timely file service contracts and publish tariffs. Id. The CMA Group states that granting this 

exemption would support the flow of U.S. commerce by allowing them to honor rates, charges, 

and rules offered to their customers. Id.

The CMA Group indicates that they are using their currently functional systems to track 

their commitments to customers and to mitigate any negative impacts of the cyberattack, and the 

2 As an example, the CMA Group describes how APL wanted to revise the effective date of a general rate 

increase (GRI) from October 1, 2020, to November 1, 2020, but was unable to do so because it could not 

access its tariff. According to the CMA Group, once access is obtained, withdrawing the October 1 GRI 

would result in APL not being able to apply a November 1 GRI due to the 30-day notice requirement for 

tariff rate increases.

3 The CMA Groups requests that the Commission permit them to make all required service contract filings 

and tariff publications “within 60 days following September 27, 2020,” which is November 26, 2020. See 

Pet. at 3.

4 The petition requests an exemption from section “520.8(4).” The Commission assumes this is a typo and 

that the CMA Group is seeking an exemption from § 520.8(a)(4), which permits tariff changes that result 

in a decrease in cost to shipper to become effective on publication. 

 191 2 F.M.C.2d 2 F.M.C.2d
 

requested exemption is necessary to reduce potential burdens on customers. Id. at 3. The CMA 

Group asserts that the requested exemption will not reduce competition or be detrimental to 

commerce and would instead have the opposite effect by allowing them to continue offering 

sustainable transportation to U.S. customers. Id. 

The Commission issued a notice of the CMA Group’s petition and requested comments 

from interested parties on October 8, 2020. The notice was published in the Federal Register on 

October 14, 2020. No comments were received.

II. DISCUSSION

A. Service Contract Filing

The Commission’s regulations require that carriers file original service contracts (as 

opposed to amendments) with the Commission “before any cargo moves pursuant to that service 

contract.” 46 C.F.R. § 530.8(a)(1). In addition, § 530.8(b) requires that each original contract 

include, among other terms, an effective date that is no earlier than the filing date. See §§ 

530.3(i) (defining “effective date” for original service contracts and amendments); 530.8(b)(8)(i) 

(requiring every service contract to include its effective date). Similarly, § 530.14(a) provides 

that “[p]erformance under an original service contract may not begin before the day it is effective 

and filed with the Commission.” 

In contrast, the Commission’s regulations provide more flexibility to service contract 

amendments, which can be filed within 30 days after the amendment’s effective date. See 46 

C.F.R. §§ 530.3(i); 530.8(a)(2); 530.8(b)(8)(i); 530.14(a). 

On April 27, 2020, the Commission issued a temporary exemption allowing carriers to 

file original service contracts up to 30 days after they go into effect, mirroring the delayed filing 

requirements applicable to service contract amendments. Temporary Exemption from Certain 

Service Contract Requirements, 2 F.M.C.2d 65 (FMC 2020). The exemption was originally set to 

expire December 31, 2020, but the Commission recently extended the exemption until June 1, 

2021. Temporary Exemption from Certain Service Contract Requirements, Docket No. 20-06, 

2020 FMC LEXIS 206 (FMC Oct. 1, 2020). 

The CMA Group requests further exemption from §§ 530.3(i), 530.8(a) and 530.14(a) 

with respect to original service contracts to permit them to be filed more than 30 days after 

they go into effect, but not later than November 26, 2020. The CMA Group is also requesting 

a similar exemption from the current regulatory requirements with respect to service 

contract amendments to permit them to be filed more than 30 days after they go into effect, 

but not later than November 26, 2020. The requested exemption would extend to service 

contracts and amendments applicable to cargo received by the CMA Group on or after 

September 27, 2020.

Exemptions from the requirements of part 530 are governed by 46 U.S.C. § 40103(a) 

and the Commission’s Rules of Practice and Procedure, specifically 46 C.F.R. §§ 502.10 

and 502.92. 46 C.F.R. § 530.13(b). Under 46 U.S.C. § 40103(a), the Commission may grant 

 192 2 F.M.C.2d 2 F.M.C.2d
 

prospective exemptions from Shipping Act requirements, “if the Commission finds that the 

exemption will not result in substantial reduction in competition or be detrimental to 

commerce.”

The CMA Group states that the service contract terms at issue have already been 

agreed to by the parties, but that the recent cyberattack has affected their ability file these 

service contracts and amendments with the Commission within 30 days. The CMA Group 

asserts that the requested exemption will not reduce competition or be detrimental to commerce 

and would instead have the opposite effect by allowing them to continue offering sustainable 

transportation to U.S. customers. Id. 

We agree. The CMA Group seeks additional time to file certain service contracts and 

amendments because of their current inability to make such filings. These contracts and 

amendments have already been agreed to and would normally need to be filed beginning 

October 27, 2020 (30 days after September 27, 2020), but the CMA Group is requesting an 

additional 30 days for filing.

This exemption is even more limited than the 2017 exemption granted to another 

carrier, Maersk, following a cyberattack. Petition of Maersk Line A/S for an Exemption from 

46 C.F.R. § 530.8, Pet. No. P1-17, slip op. (July 19, 2019). In that case, the Commission 

granted Maersk’s request for an exemption allowing the carrier to agree to service contracts 

with shippers and apply those terms to cargo received before the date agreement was 

reached on the contractual terms. In this case, the CMA Group and their customers have 

already agreed on the affected service contract terms, but the CMA Group is currently unable 

to file the contracts with the Commission, and failure to grant the exemption could result in 

shippers being charged higher rates or subject to other unfavorable terms. Given these 

potential harms, the length of the requested filing extension (i.e., an additional 30 days), and 

the limited number of service contracts that would be affected, the Commission finds that 

the requested exemption will not result in substantial reduction in competition or be 

detrimental to commerce.

Based on the foregoing, the Commission is granting the CMA Group’s request for 

exemption from the relevant service contract regulations provided that service contracts and 

amendments applicable to cargo received on or after September 27, 2020, must be filed by 

November 26, 2020, or 30 days after the effective date, whichever is later.5

B. Tariff Publication

The Shipping Act and the Commission’s regulations require that common carriers publish 

tariffs showing all their rates, charges, classifications, rules, and practices between all points 

or ports on their own routes and on any through transportation route that has been 

established. See 46 U.S.C. § 40501; 46 C.F.R. § 520.3. Changes in rates, charges, rules, 

5 The exemption is not intended to reduce the normal filing deadlines applicable to service contracts and 

amendments. A service contract that goes into effect after October 27, 2020, may be filed after November 

26, 2020, so long as it is filed not later than 30 days after the effective date.

 193 2 F.M.C.2d 2 F.M.C.2d
 

regulations, or other tariff provisions that result in a decrease in cost to the shipper may 

become effective on publication. See 46 U.S.C. § 40501(e)(2); 46 C.F.R. § 520.8(a)(4). On 

the other hand, new or initial rates, charges, or changes in existing rates that result in an 

increased cost to a shipper may go into effect no earlier than 30 days after publication. 46 

U.S.C. § 40501(e)(1); 46 C.F.R. § 520.8(a)(1). Commission regulations also provide that the 

applicable rates for any given shipment are those in effect on the date the cargo is received 

by the carrier.6 46 C.F.R. § 520.7(c). 

The CMA Group requests exemption from these provisions so that it can apply tariff 

rates, charges, and rules communicated to customers but not yet published, provided that these 

tariff changes are published by November 26, 2020. The requested exemption would apply to 

tariff rates, charges, and rules that, but for the CMA Group’s inability to publish, would have 

been effective with respect to cargo received on or after September 27, 2020.

Exemptions from the statutory requirements in 46 U.S.C. § 40501 and the regulatory 

requirements in 46 C.F.R. part 520 are governed by 46 U.S.C. § 40103 and the 

Commission’s Rules of Practice and Procedure (46 C.F.R. part 502). See 46 C.F.R. 

§ 520.13(a).7 As discussed above, § 40103(a) provides that the Commission may grant 

prospective exemptions from Shipping Act requirements, “if the Commission finds that the 

exemption will not result in substantial reduction in competition or be detrimental to 

commerce.”

The CMA Group notes that if relief is not granted, shippers making bookings against 

the quoted rates will instead be invoiced at the higher published rates (e.g., general 

commodity, N.O.S. or Cargo N.O.S. rates). The CMA Group further states that they will not 

use this flexibility to apply higher tariff rates or charges absent an alternative form of written 

30-day notice clearly communicated to shippers. The CMA Group asserts that the requested 

exemption will not reduce competition or be detrimental to commerce and would instead have 

the opposite effect by allowing them to continue offering sustainable transportation to U.S. 

customers.

We agree. The CMA Group seeks permission to apply tariff rates, charges, and rules 

that have been communicated to shippers but not published due to the cyberattack. Without 

an exemption, shippers would be invoiced based on the applicable published tariff rates and 

charges, which could be higher than the quoted terms. And although the CMA Group

suggests that they may also use this authority to implement tariff changes that would result 

in increased rates to shippers prior to or less than 30 days after publication, they have 

acknowledged the concerns such conduct might raise and committed to providing an 

alternative form of written 30-day notice to shippers before applying such changes. In short, 

the CMA Group is trying to approximate the status quo had the cyberattack never occurred.

6 Although the petition only requests exemption from Commission regulations, because 46 C.F.R. § 

520.8(a)(1) and (4) implement the requirements in 46 U.S.C. § 40501(e), the Commission interprets the 

request to extend to those statutory provisions as well. 

7 This regulation incorporates 46 U.S.C. § 40103 as well as “46 C.F.R. § 502.67.” Rule 67, however, has 

been moved twice, first to § 502.74, and now to § 502.92.

 194 2 F.M.C.2d 2 F.M.C.2d
 

Given the potential harm to shippers that could be charged higher rates without the 

exemption, the limited duration and number of shipments subject to the exemption, and the 

CMA Group’s commitment to providing alternative written 30-day notice to shippers before 

applying any tariff changes that would result in increased rates or charges, the Commission 

finds that the requested exemption will not result in substantial reduction in competition or 

be detrimental to commerce, subject to certain conditions. 

Specifically, the CMA Group must provide written notice to shippers at least 30 days 

in advance of applying tariff changes that result in increased rates or charges, and such 

notice must be given in a manner that is likely to be seen by shippers. Acceptable forms of 

notice include: (1) emails to all of the CMA Group member’s customers; (2) prominent 

posting on the CMA Group’s websites; or (3) other forms of notice determined to be 

acceptable by the Director of the Bureau of Trade Analysis. In addition, given that the CMA 

Group intends to publish all affected tariff changes by November 26, 2020, the exemption is 

limited to unpublished increases that are set to go into effect on or before December 25, 

2020 (i.e., less than 30 days after November 26, 2020). Any increases set to go into effect on 

or after December 26, 2020, must comply with the publication and 30-day notice 

requirements in 46 U.S.C. § 40501(e) and 46 C.F.R. § 520.8(a).

Despite the determination that the requested exemption meets the standard set forth 

in § 40103, the Commission lacks the authority to provide the CMA Group with all the relief 

requested. Under § 40103, the Commission may “exempt for the future any specified 

activity of” regulated entities from Shipping Act requirements. The Commission’s authority 

under this provision is therefore limited to prospective relief; the Commission cannot 

exempt past activities from the requirements of the Shipping Act. The Shipping Act and the 

Commission’s regulations require that carriers apply published tariff rates, charges, and 

rules in effect on the date cargo is received. See 46 U.S.C. § 40501(e); 46 C.F.R. §§ 

520.7(c); 520.8. The CMA Group is seeking not only a prospective exemption that would 

allow them to apply unpublished tariff rates, charges, and rules to future shipments, but also 

an exemption that would permit them to apply unpublished tariff rates, charges, and rules 

retroactively to cargo that has already been received. Section 40103 does not permit the 

latter type of relief. Accordingly, the Commission is granting an exemption from the 

relevant tariff requirements only with respect to cargo that is received on or after the date of 

this order.

For cargo received prior to the date of this order, the Shipping Act provides an 

alternative process by which carriers may seek permission from the Commission to refund 

or waive collection of freight charges if “there is an error in a tariff, a failure to publish a 

new tariff, or an error in quoting a tariff, . . . the refund or waiver will not result in 

discrimination among shippers, ports, or carriers,” and the carrier has published a new tariff 

setting forth the rate on which the refund or waiver would be based.” 46 U.S.C. § 40503.

The Commission’s regulations at 46 C.F.R. part 502, subpart Q, describe the application 

requirements and the decision-making process. Such applications must be filed within 180 

days from the date of sailing of the vessel from the port at which the cargo was loaded. 46 

U.S.C. § 40503(3); 46 C.F.R. § 502.271(b). 

The situation described by the CMA Group appears to be the type § 40503 is intended 

 195 2 F.M.C.2d 2 F.M.C.2d
 

to address. The CMA Group has communicated tariff rate, charge, and rule changes to 

shippers but failed to publish those changes in its tariffs due to the cyberattack. Providing 

refunds or waiving charges in these circumstances would not appear to result in 

discrimination among shippers, ports, or carriers. Accordingly, for cargo received prior to 

the date of this order, the CMA Group may use the process in § 40503 and the Commission’s 

regulations in order to refund or waive collection of freight charges to reflect the tariff rates, 

charges, and rules previously communicated to shippers once it is able to publish those tariff 

items.8 To the extent that flexibility is needed with respect to the procedural requirements in 

46 C.F.R. part 502, subpart Q, the Commission is willing to consider requests for waiver in 

accordance with 46 C.F.R. § 502.10.

III. CONCLUSION

For the reasons discussed above, the Commissions grants in part and denies in part the petition, 

subject to the conditions stated below. 

THEREFORE IT IS ORDERED, that the CMA Group’s request for an exemption from 46 

C.F.R. §§ 530.3(i), 530.8(a) and 530.14(a) is GRANTED provided that: 

1. All service contracts and amendments applicable to cargo received by the carrier on or 

after September 27, 2020, must be filed with the Commission in the manner set forth in 

46 C.F.R. part 530 by November 26, 2020, or 30 days after the effective date of the 

service contract or amendment, whichever is later; and

2. The exemption expires November 26, 2020.

9

IT IS FURTHER ORDERED, that the CMA Group’s request for exemption from 46 U.S.C. 

§ 40501(e) and 46 C.F.R. §§ 520.7(c), 520.8(a)(1), and 520.8(a)(4) is GRANTED with respect 

to cargo received by the CMA Group on or after the date of this order, provided that: 

1. All tariff rates, charges, and rules subject to the exemption must be published in 

accordance with the requirements of 46 C.F.R. part 520 no later than November 26, 2020. 

2. The CMA Group must provide written notice to shippers at least 30 days in advance 

before applying any new or initial rate, charge, or change in an existing rate that results in an 

increased cost to a shipper, and such notice must be given in a manner that is likely to be 

seen by shippers. Acceptable forms of notice include: (a) emails to all of the CMA Group

member’s customers; (b) prominent posting on the CMA Group’s websites; or (c) other 

forms of notice determined to be acceptable by the Director of the Bureau of Trade Analysis. 

2. The exemption from 46 C.F.R. §§ 520.7 and 520.8(a)(4) expires on November 26, 2020.10

8 Relief under § 40503 is limited to refunding or waiving collection of freight charges. Section 40503 does 

not allow the CMA Group to apply unpublished increases retroactively.

9 November 26, 2020, is the last day on which the exemption applies. See 46 C.F.R. § 502.101.

10 November 26, 2020, is the last day on which the exemption applies. See 46 C.F.R. § 502.101.

 196 2 F.M.C.2d 2 F.M.C.2d
 

3. The exemption from 46 C.F.R. § 520.8(a)(1) is limited to tariff changes effective on or 

before December 25, 2020. 

IT IS FURTHER ORDERED, that the CMA Group’s request for exemption from 46 U.S.C. 

§ 40501(e) and 46 C.F.R. §§ 520.7(c), 520.8(a)(1), and 520.8(a)(4) is DENIED with respect to 

cargo received by the CMA Group before the date of this order. 

FINALLY, IT IS ORDERED, that this proceeding be discontinued. 

 

By the Commission. 

 Rachel E. Dickon 

 Secretary

 197 2 F.M.C.2d 2 F.M.C.2d
FEDERAL MARITIME COMMISSION

Served: October 29, 2020 

BY THE COMMISSION: Michael A. KHOURI, Chairman, Rebecca F. 

DYE, Daniel B. MAFFEI, Louis E. SOLA, Carl W. BENTZEL, 

Commissioners.

MEMORANDUM OPINION AND ORDER

I. INTRODUCTION

This case is before the Commission on Complainants’ exceptions to the 

Administrative Law Judge’s (ALJ) sua sponte dismissal of claims alleging that 

Respondents Marine Transport Logistics, Inc. (MTL) and Dmitry Alper 

violated 46 U.S.C. §§ 41102(c) and 41104(a)(3) and (10). The dismissed claims 

relate to a 2006 Mercedes stored in MTL’s New Jersey warehouse and three 

motorcycles stored by a competitor non-vessel-operating common carrier (NVOCC). 

Complainants allege that Respondents converted the Mercedes by surreptitiously 

shipping it to Dubai, United Arab Emirates, where they intended to sell it and keep 

the proceeds. Complainants further allege that Respondents interfered with 

Complainants’ arrangements to have a competitor NVOCC ship the motorcycles 

overseas.

The ALJ addressed the Mercedes and motorcycle claims in an Initial 

Decision Partially Dismissing the Complaint (Initial Decision or I.D.). The ALJ 

dismissed the § 41102(c) claim regarding the Mercedes for lack of jurisdiction and 

failure to state a claim. The ALJ dismissed the § 41104(a)(3) claim regarding the 

motorcycles for failure to state a claim. The ALJ dismissed all remaining claims 

regarding the Mercedes and motorcycles as abandoned because Complainants did 

MAVL CAPITAL INC., IAM AL GROUP 

INC., AND MAXIM OSTROVSKIY, 

COMPLAINANTS

V. 

MARINE TRANSPORT LOGISTICS, INC. 

AND DMITRY ALPER, RESPONDENTS. 

Docket No. 16-16 

 198 2 F.M.C.2d 2 F.M.C.2d
not address those claims in responding to the ALJ’s show cause order. Complainants 

filed exceptions to some, but not all, of the ALJ’s findings. 

Complainants also petition the Commission for leave to supplement the 

record with a bill of lading for the Mercedes and a declaration offered to show that 

MTL assumed responsibility for transporting the Mercedes. MTL opposes the 

petition, and Complainants seek leave to file a reply. 

For the reasons discussed below, the Commission: (1) reverses the ALJ’s 

dismissal of the § 41102(c) claim regarding the Mercedes and remands that claim for 

further proceedings; (2) affirms the dismissal of the § 41104(a)(10) claim regarding 

the Mercedes; and (3) affirms the dismissal of the § 41104(a)(3) claim regarding the 

motorcycles. The Commission denies the petition to submit additional evidence and 

Complainants’ motion for leave to file a reply in support of that petition.

II. BACKGROUND

A. Factual Background

1. Parties

Complainant MAVL Capital Inc. (MAVL) is a New York corporation that 

imports, repairs, and sells vehicles in the overseas market. Compl. ¶ 1.11

Complainant 

IAM & AL Group, Inc. (IAM) is an Indiana corporation that contracted with MTL to

transport a 2011 Porsche to a buyer in Kotka, Finland. Id. ¶¶ 2, 37-38. Complainant 

Maxim Ostrovskiy is a principal of both MAVL and IAM and resides in Moscow,

Russia. Id. ¶ 3. Respondent MTL is a New York corporation and a licensed NVOCC

(FMC License No. 018709). Id. 

¶¶ 4, 6, 9. Respondent Dmitry Alper serves as MTL’s Director of 

Operations and oversees daily operations. Id. ¶¶ 5, 7-8. 

2. 2006 Mercedes SL65

In December 2012, MAVL imported a 2006 Mercedes SL65 from Germany, 

retained MTL as the “receiving agent,” and had the vehicle delivered to MTL’s New 

Jersey warehouse. Id. ¶¶ 27-29.2Complainants imported the Mercedes “so that

maintenance could be performed on the vehicle after which it would subsequently be 

shipped overseas.” Id. ¶ 27. Mr. Ostrovskiy informed MTL of this plan when MAVL 

stored the Mercedes in December 2012, but he did not specify a timeline or proposed 

shipping date at that time. Id. 

1 The facts recited in this memorandum opinion are taken from the complaint and from documents 

incorporated by reference in or integral to the complaint, documents subject to official notice under 46

C.F.R. § 502.226(a), and documents treated as an amendment to the complaint. Those documents include a 

declaration from Mr. Ostrovskiy (Ostrovskiy Certif.) and MTL’stariff

2 MTL did not arrange the Mercedes’ transportation from Germany to the United States, and that 

transportation is not at issue. I.D. at 13.

 199 2 F.M.C.2d 2 F.M.C.2d
29; Ostrovskiy Certif. ¶¶ 7-10. Mr. Ostrovskiy provided MTL with the 

certificate of title which is required for export. Ostrovskiy Certif. 9. 

MTL charged MAVL for storage of the Mercedes pursuant to MTL’s 

NVOCC tariff. Id. ¶ 4. The storage charges that MTL imposed were consistent with 

MTL’s tariff charges for cargo earmarked for export. Id. ¶¶ 4, 11. For example,

MAVL received 30 days free storage allowed under the MTL tariff for vehicles 

“received for US export shipment.” Id; Complainants’ Show Cause Resp. App. A 

(MTL Tariff, Rule 2-140). “Beyond 30 days,” MTL’s tariff establishes rates of 

$10.00 per day for vehicles stored at its Bayonne, New Jersey facility. Id. The MTL

tariff also links 30 days free storage to the need to provide the carrier with the vehicle 

title without which the “vehicle will not be loaded into a container.” Id. Following 

the initial 30-day period, MTL discounted the storage rates for the Mercedes by fifty 

percent, which Mr. Ostrovskiy attributed to the “parties’ ongoing business 

relationship.” Ostrovskiy Certif. ¶ 12.

Six months after the Mercedes arrived in MTL’s New Jersey facility, Mr.

Ostrovskiy asked MTL to produce the Mercedes for his inspection, but MTL failed to 

do so. Id. ¶ 13. Whereupon Mr. Ostrovskiy directed MTL to release the Mercedes 

and ship it to Dusseldorf, Germany. Id. ¶¶ 14-15. Several months later, Mr. 

Ostrovskiy learned that MTL had not followed these instructions, but had in fact 

shipped the Mercedes to Dubai without his knowledge or consent for the purpose of 

selling it and keeping the proceeds. Id. ¶¶ 16-17. According to Complainants, MTL 

has refused to provide them with documents verifying the sale of the Mercedes or 

confirming the details of the alleged sales transaction. Compl. ¶¶ 31-35. MTL 

claimed that the Mercedes was seized and sold consistent with its house bill of lading 

under a maritime lien for outstanding charges. Ostrovskiy Certif. ¶¶ 5-6. 

3. Harley Davidson Motorcycles

MAVL purchased three Harley Davidson motorcycles in June/July 2013 and 

received the original titles. Compl. ¶¶ 47-48. Having lost confidence in MTL by this

time, MAVL/Mr. Ostrovskiy hired Unitrans-PRA, another NVOCC, to ship the 

motorcycles overseas, and the motorcycles were stored in Unitrans’ facility awaiting 

shipment. Id. ¶ 49. According to Complainants, Mr. Alper fraudulently contacted 

Unitrans and directed it to “hold” the motorcycles and not to ship them abroad, 

causing Complainants to incur an additional $22,920 in storage fees. Id. ¶¶ 50-51.3

B. Procedural History

Complainants filed this action in August 2016 seeking over 

$180,000 in reparations for alleged violations of 46 U.S.C.

§§ 41102(c) and 41104(a)(3) and (10). After Respondents answered the complaint, 

the ALJ issued a show cause order on September 15, 2016. The ALJ directed

Complainants to show cause why the claims regarding the Mercedes and the three 

3 Complainants also allege that Respondents shipped a Porsche to Dubai without Complainants’ consent. 

Compl. ¶¶ 37-46. The ALJ did not dismiss the claims regarding the Porsche. Rather, those claims are

stayed pending the present appeal.I.D. at 28

 200 2 F.M.C.2d 2 F.M.C.2d
motorcycles should not be dismissed for lack of jurisdiction or failure to state a claim 

because the allegations did not appear to involve ocean-borne transportation of those 

vehicles between the United States and a foreign port, and in fact the allegations 

supported a contrary inference. Show Cause Order at 6-7. According to the facts 

alleged, the ALJ stated, Respondents “unlawfully converted” the Mercedes by 

removing it from storage in the U.S. and shipping it to Dubai without Complainants’ 

consent. Id. at 6. Further, the ALJ stated, the complaint “does not 

appear to allege a Shipping Act violation by MTL or [Mr.] Alper,” because

“Complainants do not allege that they hired or paid Respondents to ship 

Complainants’ motorcycles overseas or that Unitrans . . . was Respondents’ agent for 

transporting the motorcycles.” Id. at 7. 

Complainants filed a brief in response to the show cause order supplemented 

with supporting documents. Complainants’ additional submissions included: (1) Mr. 

Ostrovskiy’s declaration; (2) excerpts from MTL’s tariff; (3) a Maersk bill of lading 

for transportation of the Mercedes from the U.S. to Dubai; (4) discovery and other 

documents from MAVL Capital Inc. v. Marine Transport Logistics Inc., Docket No. 

13-cv-7110 (E.D.N.Y. Dec. 12, 2013);4

and (5) various documents reflecting fees 

charged and other dealings/communications between the parties. MTL filed a brief in 

support of the show cause order and an appendix of supporting documents. MTL’s 

appendix includes: (1) the docket sheet and the complaint filed in the related federal 

court action; and (2) email communications. Mr. Alper also filed a brief in support of 

the show cause order. 

On January 17, 2017, the ALJ dismissed the § 41102(c) claim regarding the 

Mercedes with prejudice for lack of jurisdiction, finding that MAVL did not have a 

contract of carriage with MTL for that vehicle. I.D. at 20-21. The ALJ also 

determined that Complainants failed to state a claim under § 41104(a)(3) with 

respect to the motorcycles. Id. at 26-27. The remaining claims regarding the 

Mercedes and the motorcycles were dismissed as abandoned. Id. at 3.

In timely-filed exceptions, Complainants argue that the Commission has 

jurisdiction over the § 41102(c) claim regarding the Mercedes because the parties 

had an implied contract of carriage. Complainants’ Br. in Support of its Exceptions 

to Initial Decision (Exceptions) at 13-20. Complainants also assert that they have a 

cause of action regarding the Mercedes under § 41104(a)(10) because Respondents 

refused to negotiate an unspecified debt and sold the Mercedes to satisfy it. Id. at 9-

12, 16. Complainants do not challenge the ALJ’s ruling dismissing the § 

41104(a)(3) claim regarding the motorcycles. Respondents filed separate briefs 

opposing Complainants’ exceptions and argue that the ALJ’s decision should be 

affirmed in all respects. Reply to Complainants’ Exceptions to the January 17, 2017 

4

Almost three years before filing the present Shipping Act complaint, MAVL filed a related action against

MTL in federal district court alleging that MTL and other parties violated various federal and state laws 

by unlawfully asserting a lien against the Mercedes and the Porsche as part of a comprehensive scheme to 

deprive Complainants of their property and collect bogus payments. The court ultimately dismissed the 

action. See MAVL Capital, Inc. v. Marine Transp. Logistics, Inc., 130 F. Supp. 3d 726 (E.D.N.Y. 2015). 

 201 2 F.M.C.2d 2 F.M.C.2d
Initial Decision (Exceptions Reply); Respondent Dmitry Alper’s Br. in Opposition to 

Complainants’ Exceptions to Initial Decision.

Complainants also petitioned the Commission to reopen the proceedings to 

allow additional evidence proving they had an implied contract of carriage for the 

Mercedes. Respondents oppose reopening the proceedings, and Complainants seek 

leave to file a reply to Respondents’ brief opposing their petition. 

III. DISCUSSION

A. Legal Standards

1. Standard of Review and Burden of Proof 

When the Commission reviews exceptions to an ALJ’s Initial Decision, 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, including in cases where, as here, the ALJ dismissed claims for 

lack of jurisdiction or failure to state a cause of action. Id.; see also Maher Terminals, 

LLC v. Port Auth. of N.Y. & 

N.J. (Maher II), FMC Docket No. 12-02, 2015 FMC LEXIS 43, 

*110-*11 (FMC 2015). Complainants bear the burden of proving by a preponderance 

of the evidence that the Commission has 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; Maher Terminals, LLC v. Port Auth of N.Y. & N.J. (Maher I), FMC Docket 

No. 12-02, 2014 FMC LEXIS 35, *41 (FMC 2014). 

2. Standards for Dismissal

The ALJ sua sponte ordered Complainants to show cause why the allegations 

in the complaint regarding the Mercedes and three motorcycles should not be 

dismissed for lack of subject matter jurisdiction or for failure to state a claim. In the 

Initial Decision, the ALJ noted that the Commission looks to Federal Rule of Civil 

Procedure 12(b)(1) when considering dismissals based on lack of subject matter 

jurisdiction, and to Rule 12(b)(6) when considering dismissals based on failure to 

state a claim. I.D. at 5. 

The ALJ also acknowledged that under Rule 12(b)(1), there are two different

types of jurisdictional attacks. In a factual attack, a court may consider matters 

outside the pleadings. I.D. at 5; Beck v. McDonald, 848 F.3d 262, 270 (4th Cir. 2017) 

(“In a factual challenge, the defendant argues ‘that the jurisdictional allegations of the 

complaint [are] not true,’ providing the trial court the discretion to ‘go beyond the 

allegations of the complaint and in an evidentiary hearing determine if there are facts 

to support the jurisdictional allegations.’” (quoting Adams v. Bain, 697 F.2d 1213, 

1219 (4th Cir. 1982)). In that situation, the presumption of truthfulness normally

 202 2 F.M.C.2d 2 F.M.C.2d
granted allegations does not apply. Id.

In a facial attack on subject matter jurisdiction, the court examines whether 

the complaint has sufficiently alleged subject matter jurisdiction. See id. 

Consequently, complainants have the same procedural protection afforded under 

Rule 12(b)(6). Beck, 848 F.3d at 270. In other words, all well-pleaded allegations are

accepted astrue and interpreted in the light most favorable to the complainant. See 

Erby v. United States, 424 F. Supp. 2d 180, 182 (D.D.C. 2006). 

The ALJ correctly considered the show cause order as a challenge to the 

pleadings, i.e., a facial challenge. I.D. at 5-6. The jurisdictional and pleading issues 

were raised sua sponte before any discovery in this case. And the jurisdictional 

question at issue – whether MAVL was acting as a regulated entity with respect to 

the conduct at issue – overlaps with the merits of a claim under 46 U.S.C. §§ 

41104 and 41102(c), both of which have as elements that the respondent is a

regulated entity. When, as here, jurisdictional facts are intertwined with facts central 

to the merits of a claim, the Rule 12(b)(6) standard applies. See Kerns v. United

States, 585 F.3d 187, 192-93 (4th Cir. 2009). 

Under Fed. R. Civ. P. 12 (b)(6), the facts alleged are taken as true and all 

reasonable inferences are drawn in thecomplainant’s favor. Maher II, 34 S.R.R. at 

54, 2015 FMC LEXIS 43 at *36. The Commission may consider not only factual 

allegations within the complaint but also documents attached to the complaint, 

incorporated by reference, or integral to the claims alleged, and matters subject to

official notice. Maher II, Docket No. 12-02, 2015 FMC LEXIS 43, *36, *110-*111 

(FMC 2015).5

The Commission’s Rules of Practice and Procedure allow it to take 

“[o]fficial noticeof such matters as might be judicially noticed by the courts, or of 

technical or scientific facts within the general knowledge of the Commission as an 

expert body.” 46 C.F.R. § 502.226(a). 

The facts alleged must “state a claim to relief that is plausible on its face.” Bell 

Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007); Mitsui O.S.K. Lines Ltd. v.

Global Link Logistics, 32 S.R.R. 126, 136 (FMC 2011). The facts alleged must allow

the Commission to reasonably infer that respondent may be liable for the conduct 

alleged and provide “fair notice” of the nature of the claims and bases for asserting 

them. Ashcroft v. Iqbal, 556 U.S. 662, 677 (2009); Twombly, 550 U.S. at 555. 

B. Section 41102(c) Claim Regarding the Mercedes 

Complainants allege that Respondents violated 46 U.S.C. § 41102(c) by 

shipping the Mercedes to an unauthorized foreign port where they intended to sell it 

5 Like the ALJ, in ruling on Complainants’ exceptions, the Commission considers the Ostrovskiy

certification as an amendment to the complaint. See 46 C.F.R. § 502.66(a) (“Amendments or supplements

to any pleading (complaint . . . ) will be permitted or rejected, either in the discretion of the Commission 

or presiding officer.”).

 203 2 F.M.C.2d 2 F.M.C.2d
and keep the proceeds. Compl. ¶¶ 27-30. Section 41102(c) provides that common 

carriers, marine terminal operators, and ocean transportation intermediaries 

(including NVOCCs) “may not fail to establish, observe, and enforce just and 

reasonable regulations and practices related to or connected with receiving, handling, 

storing or delivering property.” 46 U.S.C. § 41102(c). 

The ALJ dismissed Complainant’s § 41102(c) claim regarding the Mercedes 

because “Complainants do not state facts that would support a finding that they 

entered into a contract of carriage to transport the Mercedes.” I.D. at 3, 14, 15, 20. 

The ALJ found the complaint devoid of facts showing that MAVL had a contract 

with MTL to ship the Mercedes overseas as distinguished from a contract to store it 

in the United States. See id. at 14-15, 20-21. The ALJ was not persuaded by 

Complainants’ circumstantial evidence or their theory that Respondents’ alleged 

assertion of a maritime lien against the Mercedes demonstrated a contract of 

carriage. See id. at 15-20. The ALJ’s reasoning in this regard is premised on the 

notion that parties’ arrangement for storage of the Mercedes was not connected to 

international ocean transportation. 

Because the ALJ premised dismissal largely, if not exclusively, on the 

absence of a contract of carriage, the parties’ arguments on appeal focus primarily 

on whether there was an express or implied contract of carriage to ship the

Mercedes to overseas. In that vein, they discuss whether MTL had a maritime lien 

against the Mercedes and whether the alleged conversion occurred in the United

States or after the Mercedes arrived in Dubai. 

The ALJ erred, however, in framing the question as whether the parties had a 

contract to ship the Mercedes overseas. Rather, as the Commission explained in 

Crocus Investments, LLC v. Marine Transport Logistics, Inc., 1 F.M.C. 2d 403, 415 

(FMC 2018), the jurisdictional question in § 41102(c) casesis whether the respondent 

was acting as a regulated entity when it allegedly violated the Shipping Act. In 

Crocus, the Commission held that “[t]he relevant inquiry here is not . . . limited to

whether there was a contract for overseas shipment” and stated that focusing on the 

existence of a contract or whether the cargo actually left the U.S. for a foreign port 

“unduly narrows the scope of the inquiry to two factors.” Id. “Whether the [cargo] 

was actually transported to a foreign port or the subject of a contract to do so is 

highly relevant to this analysis, but not necessarily determinative.” Id. The 

Commission noted that a broad swath of conduct falls within the scope of NVOCC 

activities. Id. (citing 46 C.F.R. 515.2(k)). 

Properly framed, the question is whether Respondent MTL was a common 

carrier with respect to the allegations regarding the Mercedes.6

See Tienshan, Inc. v. 

6 Section 41102(c) applies to common carriers, marine terminal operators, and ocean transportation 

intermediaries. There are two types of ocean transportation intermediary: ocean freight forwarders and 

NVOCCs. 46 U.S.C. § 40102(20). Because an NVOCC is a type of common carrier, and because there is 

no indication that MTL is a marine terminal operator or ocean freight forwarder, the “regulated entity” 

question here involves the definition of common carrier.

 204 2 F.M.C.2d 2 F.M.C.2d
Tianjin Hua Feng Transport Agency Co., Ltd., FMC No. 08-04, 2011 FMC LEXIS 

9, *39 (ALJ Mar. 9, 2011). Common carriers are defined by three traits; they: (1) 

hold themselves out to the general public as providing transportation by water for 

passengers or cargo between the United States and a foreign country; (2) assume 

responsibility for transporting the passengers or cargo from the port or point of

receipt to the port or point of destination; and (3) use, for all or part of that 

transportation, a vessel operating on the high seas or the Great Lakes between a 

United States port and a foreign port. 46 U.S.C. § 40102(7) and (17); 46 C.F.R. § 

515.2(e) and (k).

When dealing with alleged common carriers or NVOCCs under § 41102(c), 

the Shipping Act’s common carrier definition forms the basis for a “fact-intensive 

analysis” that considers the parties’ conduct and actual arrangements during the 

relevant time frame. Crocus, 1 F.M.C. 2d. at 415 (citing Worldwide Relocations— 

Possible Violations of the Shipping Act, 32 S.R.R. 495, 503, 2012 FMC LEXIS 23, 

*13-*14 (FMC 2012). The Commission’s well- defined methodology for deciding 

common carrier status considers the totality of circumstances and their combined 

effect. Worldwide, 32 S.R.R. at 503, 2012 FMC LEXIS 23, *13-*14. 

Here, MTL’s alleged actions regarding the Mercedes meet all criteria that 

define a common carrier. MTL unquestionably held itself out as a common carrier; it 

is registered with the Commission as a licensed NVOCC and publishes an NVOCC 

tariff.7 I.D. at 3-5; MTL Tariff at 1; see also Crocus, 1 F.M.C. 2d at 410; Tienshan, 

2011 FMC LEXIS 9, at *39-*42. 

Taking Complainants’ allegations as true, MTL also assumed responsibility 

for the Mercedes when it agreed to store it and tacitly understood that MAVL would 

eventually have the Mercedes shipped abroad. Compl. ¶¶ 27-29. When MTL 

accepted delivery of the Mercedes in early December 2012, Mr. Ostrovskiy told 

MTL that MAVL would eventually have the car shipped back to Germany after 

inspecting it and ordering repair parts. Id. MTL acknowledged that the Mercedes was 

earmarked for export by granting MAVL the same 30 days free storage it allows 

cargo destined for export under its NVOCC tariff. MTL’s tariff allows “30 days free 

storage starting from the date of arrival of the vehicle at the warehouse, in order to

allow time to provide the Carrier with the vehicle title, absent which the vehicle will 

not be loaded into a container.” MTL Tariff, Rule 2-140. According to Mr. 

Ostrovskiy, MAVL had an on-going business relationship with MTL Ostrovskiy 

Certif. ¶ 12, so MTL presumably knew that MAVL is in the vehicle export/import 

business and likely to ship the Mercedes abroad at some point. 

Further support for MTL having assumed responsibility for transportation 

comes from the undisputed allegations and evidence that MTL actually shipped the 

Mercedes overseas as an NVOCC. Complainants allege that MTL shipped the 

7 Marine Transport Logistic Inc. (Org. No. 018709) is listed on the Commission’s website as a registered 

NVOCC. (https://www2.fmc.gov/oti/NVOCC.aspx, last visited October 14, 2020).

 205 2 F.M.C.2d 2 F.M.C.2d
Mercedes to Dubai. See Compl. ¶¶ 27-31. A bill of lading issued by Maersk for the 

Mercedes’ shipment 8shows MTL listed as the shipper, which would be consistent 

with it acting as an NVOCC.9 See 46 U.S.C. § 40102(7) and (17).

As for the third element of the common carrier definition, Complainants 

allege that the Mercedes was transported between a United States port and a foreign 

port. Compl. ¶ 31; Ostrovskiy Certif. ¶¶ 16-17. This is further demonstrated by the 

Maersk bill of lading for the Mercedes.

In sum, at this stage of the proceedings, Complainants have adequately 

alleged that MTL was acting as an NVOCC with respect to the Mercedes. The 

Commission therefore reverses the ALJ’s dismissal of the § 41102(c) claim 

regarding the Mercedes and remands it for further proceedings, during which 

Complainants would need to prove all the elements of their § 41102(c) claim under 

the Commission’s interpretative regulations at 46 C.F.R. § 545.4.10

C. Section 41104(a)(3) Claim Regarding the 

Motorcycles 

Complainants also allege that Respondents retaliated against them in violation 

of 46 U.S.C. § 41104(a)(3) by directing another NVOCC (Unitrans) not to ship 

Complainant’s motorcycles. 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. 

The ALJ noted that under this section, the “unfair or unjustly discriminatory

methods” at issue refer to practices designed to stifle outside competition. I.D. at 16. 

The ALJ dismissed the 46 U.S.C. § 41104(a)(3) claims regarding the motorcycles 

with prejudice for failure to state a claim because, according to the ALJ, the

8

 The Commission may consider the Maersk bill of lading because it is referenced in the Complaint, Compl. ¶ 34, 

and the Commission can also take official notice of information printed on the Maersk bill of lading. See 46 C.F.R. § 

502.226(a). A copy of the Maersk bill of lading was filed as an exhibit to Complainants’ Show Cause Resp., Ex. B 

9 Respondents argue that their alleged role in shipping the Mercedesis not relevant because if they 

committed conversion (which they deny), the unlawful act occurred while the car was still stored in New 

Jersey. See Respondent Marine Transport Logistic Inc.’s Br. in Support of the Order to Show Cause, 3-5, 

Oct. 17, 2016. Whether and where the alleged conversion occurred might be relevant to the merits of the § 

41102(c) claim but is less relevant to whether MTL acted as an NVOCC with respect to the Mercedes. 10 On remand, the ALJ may also need to address whether and on what basis the Complainants can pursue a § 

41102(c) claim against Mr. Alper. Section 41102(c) governs the conduct of regulated entities, not individuals. 

Complainants allege that Mr. Alper acted as MTL’s alter ego, that their actions are one and the same, and that it would 

be unjust not to pierce the corporate veil and hold him accountable for alleged Shipping Act violations. Compl.¶¶ 

12-16

 206 2 F.M.C.2d 2 F.M.C.2d
allegations did not implicate such competition. Id. at 26-27. 

Complainants did not, however, challenge the dismissal of the § 41104(a)(3) 

claims regarding the motorcycles in their exceptions. See Exceptions at 9-28. Nor do 

they mention the motorcycles in any of their numerous additional filings subsequent 

to the Initial Decision. Because Complainants did not challenge this dismissal in their 

exceptions, the Commission affirms this aspect of the Initial Decision. See 46 C.F.R. 

§ 502.227(a)(1), (3).

D. Claims Dismissed as Abandoned

In the Initial Decision, the ALJ dismissed several claims as abandoned because 

Complainants did not address them in response to the order to show cause. I.D. at 3. 

The ALJ correctly dismissed as abandoned any 46 U.S.C. §§ 41104(a)(10) and § 

41102(c) claims regarding the motorcycles because Complainants did not allege 

violations of those statutory prohibitions vis-à-vis the motorcycles. See id. at 8, 25. 

Moreover, Complainants did not challenge these dismissals in their exceptions. 

The ALJ also dismissed as abandoned Complainants’ claim that Respondents 

violated § 41104(a)(10) with respect to the Mercedes. I.D. at 3, 8. On appeal, 

Complainants argue that the ALJ erred in dismissing this claim. According to 

Complainants, the complaint together with the Ostrovskiy certification sufficiently 

alleges that “MTL refused to deal or negotiate with respect to any monies that were 

purportedly due and owing to MTL for reasons unrelated to the Mercedes, and 

unilaterally decided to sell the Mercedes to satisfy an alleged debt.” Exceptions at 

16. Complainants also argue that the Ostrovskiy certification alleges that MTL 

refused to offer any explanation as to the whereabouts of the vehicle.” Id. 

Given that the ALJ’s show cause order focused on subject matter jurisdiction 

and Complainants may have thought that the show cause order was limited to 

jurisdictional concerns, the Commission will assume that Complainants did not 

intentionally abandon the § 41104(a)(10) claim. The result, however, is the same 

because Complainants failed to state a § 41104(a)(10) claim with respect to the 

Mercedes. Section 41104(a)(10) prohibits common carriers from “unreasonably 

refus[ing] to deal or negotiate.” 46 

U.S.C. § 41104(a)(10). Proving unlawful refusal to negotiate under 

§ 41104(a)(10) requires the complainant to show that: (1) the respondent 

is a common carrier; (2) who actually refused to deal or negotiate; and 

(3) in doing so acted unreasonably. Canaveral Port Auth. -- Possible 

Violations of Section 10(b)(10), Unreasonable Refusal to Deal or 

Negotiate, 29 S.R.R. 1436, 1448 (FMC 2003). 

The complaint, however, merely recites the statutory language of § 41104(a) 

without alleging facts suggesting that MTL refused to deal or negotiate and that any 

such refusal was unreasonable. Compl. ¶¶ 18, V.B. At most, Complainants allege that 

MTL failed to follow the legal prerequisites for a sale and did not provide sale 

 207 2 F.M.C.2d 2 F.M.C.2d
documentation to Complainants. Even drawing inferences in Complainants favor, 

these allegations do not suggest an unreasonable refusal to deal. The Ostrovskiy 

certification provides additional detail about MTL’s alleged refusal to provide the

vehicle for inspection, but taking this as true, it is not at all clear that Mr. Ostrovskiy 

was alleging an unreasonable refusal to deal.

Moreover, neither the allegations in the complaint nor the Ostrovskiy 

declaration match Complainant’s new § 41104(a)(10) argument in their Exceptions, 

which is that it was an unreasonable refusal to deal for MTL to sell the Mercedes to 

satisfy an unrelated debt. Exceptions at 16. But Complainants already made this 

allegation in their complaint as part of their § 41102(c) claim. Compl. ¶ V.C (“MTL 

and Alper have violated 46 U.S.C. 41102(c) by exercising a purported maritime lien 

for monies allegedly owed to third parties, and by detaining, misdelivering, and 

converting Complainants’ automobiles in order to sell them overseas for a profit.”). 

In short, Complainants allegations and their shifting theories in their Exceptions are 

insufficient to provide Respondents with fair notice of the nature and basis for their § 

41104(a)(10) claim.

Moreover, the Commission agrees with the ALJ that dismissal of this claim 

should be with prejudice. Although the Commission typically allows amendments

liberally, Maher II, 2015 FMC LEXIS 43 at *115, Complainants have already had an 

opportunity to correct the deficiencies in their § 41104(a)(10) claim but failed to do 

so. The ALJ allowed Complainants to supplement their complaint with the

Ostrovskiy certification filed in response to the Show Cause Order. Despite that 

opportunity, Complainants failed to include factual allegations supporting their § 

41104(a)(10) claim. Additionally, Complainantslitigated the underlying events in 

district court for several years before bringing the Shipping Act claims before the 

Commission and thus had ample opportunity to develop the factual basis for their 

claims.

For all these reasons, the Commission affirms the ALJ’s dismissal with 

prejudice of the § 41104(a)(10) claim regarding the Mercedes for failure to state a 

claim.

E. Complainants’ Rule 230 Petition

After the exceptions were briefed, Complainants petitioned the Commission 

under Rule 230 to reopen the proceedings so they could submit an MTL bill of 

lading for the Mercedes. According to Complainants, the bill of lading contradicts 

some of Respondents’ arguments that the Commission lacks jurisdiction under § 

41102(c). Respondents oppose reopening the proceedings to allow this additional 

evidence and argue that the evidence is not new and is irrelevant in any event. Reply 

to Complainants’ Pet. for Leave to Supplement Exceptions, 3-4, Mar. 9, 2017. 

Because the Commission finds that Complainants have sufficiently alleged 

that MTL is an NVOCC with respect to the Mercedes, the proffered bill of lading is 

 208 2 F.M.C.2d 2 F.M.C.2d
not necessary for the Commission to decide this appeal. The Commission therefore 

denies Complainants’ Rule 230 petition as moot. Insofar as the bill of lading may be 

relevant to MTL’s NVOCC status or any other issue, Complainants will have the 

opportunity to offer it as evidence in future proceedings before the ALJ. Finally, the 

Commission denies Complainants’ motion for leave to submit a reply in support of 

their petition because the Commission did not request a reply and Complainants have 

not shown extraordinary circumstances. 46 

C.F.R. § 502.71(c). 

IV. CONCLUSION

The Commission hereby: 

(1) reverses the dismissal of the § 41102(c) claim regarding the 

Mercedes and remands that claim for further proceedings;

(2) affirms the dismissal with prejudice of the § 41104(a)(3) 

claim regarding the motorcycles;

(3) affirms the dismissal with prejudice of the § 41104(a)(10) 

claim regarding the Mercedes;

(4) denies Complainants’ Rule 230 petition as moot; and 

(5) denies Complainants’ motion to file a reply in support of the 

Rule 230 petition. 

By the Commission. 

Rachel E. Dickon 

Secretary

 209 2 F.M.C.2d 2 F.M.C.2d
FEDERAL MARITIME COMMISSION

AENEAS EXPORTING LLC, Complainant

v. 

CARLO SHIPPING INTERNATIONAL, INC., Respondent. 

DOCKET NO. 20-11 

Served: November 5, 2020 

NOTICE NOT TO REVIEW

Notice is given that the time within which the Commission could determine to review the 

Administrative Law Judge’s September 29, 2020 Initial Decision Approving Settlement 

Agreement has expired. Accordingly, the decision has become administratively final. 

Rachel E. Dickon 

Secretary

 210 2 F.M.C.2d 2 F.M.C.2d
FEDERAL MARITIME COMMISSION

INTERNATIONAL OCEAN 

TRANSPORTATION SUPPLY CHAIN 

ENGAGEMENT - POSSIBLE VIOLATIONS 

OF 46 U.S.C. § 41102(C) 

Fact Finding No. 29 

Issued: November 19, 2020 

SUPPLEMENTAL ORDER

On March 31, 2020, in an effort to respond to growing concerns about 

challengesimpacting the global supply chain and the American economy, the Federal 

Maritime Commission (Commission) issued an order establishing Fact Finding 29. 

Order: International Ocean Transportation Supply Chain Engagement, 85 Fed. Reg. 

19146 (April 6, 2020). The primary purpose of the Fact Finding was to identify 

operational solutions to cargo delivery system challenges related to recent global

events.

The Order designated Commissioner Rebecca F. Dye as the Fact Finding 

Officer pursuant to 46 U.S.C. §§ 41302, 40302, 41101 to 41109, 41301 to 41309, and 

40104, and 46 C.F.R. § 502.281 et seq. The Order also granted her full authority 

under 46 C.F.R. §§502.281 to 502.291 to perform such duties as may be necessary in 

accordance with U.S. law and Commission regulations. 

The initial focus in Fact Finding No. 29 was on commercial solutions. Based 

on information obtained in the fact finding, the Commission is concerned that vesseloperating common carriers in alliances who call on the Port of New York and New 

Jersey or who call on the Port of Long Beach and the Port of Los Angeles may be 

employing practices and regulations that violate 46 U.S.C. § 41102(c). As one 

example, stakeholders who participated in discussions in Fact Finding No. 29 shared 

problems they are experiencing with policies regarding the return of empty

containers. See Press Release, Commissioner Dye Announces Findings of San Pedro 

Bay Discussions (June 17, 2020); Press Release, Commissioner Dye Completes Work 

in NY & NJ, Turns Attention to New Orleans (Aug. 4, 2020). In follow up 

conversations with the Fact Finding Officer, stakeholders have reiterated these 

concerns, and articles in the trade press have also highlighted questionable practices.

 211 2 F.M.C.2d 2 F.M.C.2d
Because of these stakeholder concerns, the Commission now has a clear and 

compelling responsibility to investigate the practices and regulations that are having 

an unprecedented negative impact on congestion and amplifying bottlenecks at these 

ports and other points in the Nation’s supply chain. This is a serious risk to the 

growth of the U.S. economy, job growth, and to our Nation’s competitive position in 

the world. 

Therefore, the Commission fully endorses efforts by the Fact Finding No. 29 

Officer, Commissioner Rebecca F. Dye, under the authority existing in the March 

31, 2020 Order, to investigate whether alliance carriers who call on the Port of New

York and New Jersey or who call on the Port of Long Beach and the Port of Los 

Angeles are employing practices or regulations in violation of § 41102(c). This 

includes, but is not limited to, practices and regulations related to demurrage and 

detention, empty container return in light of 46 C.F.R. § 545.5, and practices related 

to the carriage of U.S. exports. 

The Fact Finding Officer’s authority includes the ability to issue a Notice of 

Inquiry (NOI) and/or compulsory information demands under 46 U.S.C. § 40104 to 

alliance carriers who call on the Port of New York and New Jersey or who call on 

the Port of Long Beach and the Port of Los Angeles. 

THEREFORE IT IS ORDERED, That, pursuant to her existing authority 

under 46 U.S.C. §§ 41302, 40302, 41101 to 41109, 41301 to 41309, and 40104, and 

46 C.F.R. § 502.281 et seq., Commissioner Rebecca F. Dye investigate whether 

alliance carriers who call on the Port of New York and New Jersey or who call on 

the Port of Long Beach and the Port of Los Angeles are employing practices or 

regulations in violation of 46 U.S.C. § 41102(c); 

IT IS FURTHER ORDERED, That, the Fact Finding Officer provide periodic 

updates to the Commission on the results of efforts undertaken by this investigation;

IT IS FINALLY ORDERED, That, notice of this Order be published in the Federal 

Register.

By the Commission. 

Rachel E. Dickon 

Secretary

 212 2 F.M.C.2d 2 F.M.C.2d
FEDERAL MARITIME COMMISSION Office of Administrative Law Judges

CROCUS INVESTMENTS, LLC AND CROCUS, FZE, 

Complainants, 

v. 

MARINE TRANSPORT LOGISTICS, INC. AND ALEKSANDR 

SOLOVYEV A/K/A ROYAL FINANCE GROUP INC., 

Respondents. 

DOCKET NO. 15-04 

Served: December 9, 2020 

BEFORE: Erin M. WIRTH, Chief Administrative Law Judge. 

INITIAL DECISION ON REMAND1

I. INTRODUCTION

A. Overview and Summary of Decision

On May 27, 2015, Complainants Crocus Investments, LLC (“Crocus Investments”) and 

Crocus, FZE (collectively “Crocus”) commenced this proceeding by filing a complaint alleging 

that Respondents Marine Transport Logistics, Inc. (“MTL” or “Marine Transport”) and 

Aleksandr Solovyev a/k/a Royal Finance Group, Inc. (“RFG”), violated section 41102(c) of the 

Shipping Act of 1984 (“Shipping Act” or “Act”) with regard to three boats. Respondents’ answer 

denied the allegations. 

On June 17, 2016, an initial decision dismissed the claims regarding all three boats and 

found “that the third boat never left the United States; therefore, the third boat never entered into 

international commerce, the Shipping Act does not apply, and the Commission does not have 

jurisdiction to resolve disputes regarding its handling.” Initial Decision (“I.D.”) at 1-2. On 

July 16, 2019, the Commission vacated and remanded the claim regarding the storage or other 

arrangements for the third boat, the Formula, and affirmed the initial decision in all other 

respects. Memorandum Opinion and Order (“Commission Order”) at 22. Therefore, the focus of 

this remand decision is only on the section 41102(c) claim against MTL regarding the Formula 

boat. 

1 This initial decision on remand 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.

 213 2 F.M.C.2d 2 F.M.C.2d
The Crocus Complainants, both owned and operated by Alexander Safonov, are in the 

business of buying used boats that they repair and resell overseas through an affiliated company, 

Middle East Asia Alfa, FZE (“Middle East Asia”), which has facilities in Dubai, United Arab 

Emirates. Commission Order at 2. Safonov retained the services of Respondent Aleksandr 

Solovyev, acting on behalf of his companies, and Respondent MTL to make arrangements to 

purchase, store, and transport boats that Crocus intended to resell overseas. Id. Under their 

arrangement, Safonov and Solovyev would typically view boats online and Safonov would 

decide which boats to purchase. Id. at 3. Solovyev would then arrange for the purchase of the 

boats, and, prior to overseas shipment, their storage in a New Jersey warehouse operated by 

World Express & Connection, Inc. (“World Express”), a company which Solovyev also owns. 

Id. at 2-3. Transportation of Crocus’s boats to Dubai was arranged by Solovyev acting as an 

agent for MTL, a licensed non-vessel operating common carrier (“NVOCC”) owned by Mr. 

Solovyev’s estranged wife, Alla Solovyeva. Id. at 3.

As discussed below, although the Commission has jurisdiction over the claims related to 

the Formula boat, Complainants have not established by a preponderance of the evidence that 

Respondent MTL violated the Shipping Act with respect to the Formula boat. Therefore, the 

complaint is dismissed.

B. Procedural History

1. Initial Decision 

Complainants filed their complaint on May 27, 2015, and Respondents filed their answer 

on July 10, 2015. The parties engaged in discovery. Briefing on the merits was completed on 

February 25, 2016. 

On June 17, 2016, the initial decision was issued dismissing the complaint and finding 

that Complainants “have not proved by a preponderance of the evidence that Respondents 

Marine Transport Logistics, Inc., and Aleksandr Solovyev a/k/a Royal Finance Group, Inc., 

violated section 41102(c) of the Shipping Act of 1984, 46 U.S.C. § 41102(c) or that Respondent 

Aleksandr Solovyev a/k/a Royal Finance Group, Inc., violated section 40901(a).” The initial 

decision stated: 

As set forth more fully below, in separate shipments, MTL operated as an NVOCC 

when it transported by water two of the boats at issue from the United States to 

Dubai, United Arab Emirates, and delivered them to the consignee without 

problem. Complainants do not claim that Respondents violated the Act on these 

shipments. The boats were then returned to the United States and delivered to 

MTL as consignee. Complainants contend that MTL operated as an NVOCC on 

this shipment, but the evidence does not establish that MTL operated as an 

NVOCC. The evidence establishes that the third boat never left the United States; 

therefore, the third boat never entered into international commerce, the Shipping 

Act does not apply, and the Commission does not have jurisdiction to resolve 

disputes regarding its handling. Complainants have not proved by a preponderance 

of the evidence that Respondents violated the Act. Therefore, the complaint is 

dismissed.

 214 2 F.M.C.2d 2 F.M.C.2d
I.D. at 2. 

The initial decision discussed the third boat, the Formula, stating: 

On August 7, 2013, Safonov instructed Solovyev to purchase a 2010 Formula boat 

34PC, VIN TNRD7870C010 with the intention of sending the boat to Dubai for 

repair and resale. Solovyev, through Car Express, purchased the Formula for a 

total of $56,280. The Formula required a trailer for ocean shipment. The record 

contains three different RFG invoices with the same number for this purchase. On 

August 7, 2013, RFG issued invoice #1189AT to Alexander Safonov, Crocus 

Investments in the amount of $56,280 for purchase of the Formula and $3,500 for 

delivery, a total of $59,780. Also on August 7, 2013, RFG issued invoice #1189AT 

to Andrey Tretyakov, Dubai, UAE, Middle Asia Alfa in the amount of $56,280 for 

purchase of the Formula, $3,500 for delivery, $12,000 for loading/shipping to 

Dubai, $500 for commission, $500 for documentation, and $4,500 for a trailer, a 

total of $77,280. Then on August 8, 2013, RFG issued invoice #1189AT to Crocus 

FZE in the amount of $56,280.00 for purchase of the Formula, $3,500 for delivery, 

$12,000 for loading and shipping the Formula to Dubai, $500 for commission, 

$500 for documentation, and $4,500 for a trailer, a total of $77,280. On August 9, 

2013, Crocus Investments wired $59,780 to RFG to pay the $56,280.00 for the 

Formula and the $3,500 for delivery to the port of loading. Complainants did not 

pay the $12,000 for loading and shipping the Formula to Dubai, $500 for 

commission, $500 for documentation, or $4,500 for a trailer. (ALJFF 83-89.) 

 In November 2013, Solovyev told Safonov that he had found a trailer for 

the Formula but Safonov did not like the trailer. In December 2013, Solovyev 

offered what Safonov found to be a suitable trailer. The record contains three 

different RFG invoices with number 1204AS issued on December 3, 2013. The 

first is to Crocus FZE in the amount of $12,000 for loading and shipping the 

Formula to Dubai, $500 for commission, and $500 for documentation. (CX 028.)2

The second invoice is to Crocus FZE in the amount of $4,950 for boat trailer 2005 

NTTRL VIN LW95151. (CX 035.) The third invoice is to Crocus FZE in the 

amount of $4,950 for boat trailer 2005 NTTRL VIN LW95151, $12,000 for 

loading/shipping the Formula to Dubai, $500 for commission, and $500 for 

documentation. (CX 038.) On December 4, 2013, Crocus FZE wired $4,950 to 

RFG to pay for boat trailer 2005 NTTRL VIN LW95151. The record does not 

contain any evidence that Complainants paid the $12,000 for loading/shipping the 

Formula to Dubai, $500 for commission, or $500 for documentation. 

 Safonov reached the conclusion that Tretyakov, the Middle East Asia 

employee in Dubai, “started to become a crook” and decided that he did not want 

to deal with “crooks.” On February 14, 2014, Safonov sent an email to Solovyev 

stating: “I am sending you the name of the company in Florida – from which you 

2 “CX” followed by a number refers to a page in Complainants’ original appendix, “RX” followed by a 

number 1-89 refers to a page in Respondents’ original Appendix, “RX” followed by a number 90-95 

refers to Respondents’ notice of filing dated May 4, 2016. I.D. at 10 n.5.

 215 2 F.M.C.2d 2 F.M.C.2d
have received the money for Formula-34 – please prepare all documents for the 

boat reflecting this company’s information and send me all copies, ok? Do you 

know if copies of the documents will be enough to transfer Formula to Florida? It 

is good that we did [not] have time to send it to Dubai.” (CX 055.) Solovyev did 

not send the Formula to Florida.

I.D. at 5. 

Regarding the Formula boat claims, the initial decision concluded:

The record shows that Complainants originally intended to ship the Formula to 

Dubai for repair and resale. On August 7, 2013, RFG sent invoice 1189AT for 

payment in the amount of $77,280 to Complainants’ employee in Dubai, Andrey 

Tretyakov, reflecting $56,280 for the Formula, $3,500 for delivery, $12,000 for 

loading/shipping to Dubai, UAE, $500 for commission, $500 for documentation, 

and $4,500 for a trailer to load the boat. (FF 75 (CX 031)). Complainants wired 

$59,780 on August 9, 2013, to RFG to pay for the Formula ($56,280.00) and the 

cost of the delivery to the port of loading ($3,500), and $4,950 on December 4, 

2013, to pay for the boat trailer. Complainants never paid the $12,000 for loading 

and shipping the Formula to Dubai or the $500 for Commission and $500 for 

documentation. (ALJFF 76, 85, 92.) Safonov subsequently reached the conclusion 

that Tretyakov, the Middle East Asia employee in Dubai, “started to become a 

crook,” and on February 2014, instructed Solovyev to ship the Formula to Miami 

instead. (ALJFF 86, 87.) Therefore, Complainants and Respondents (MTL, 

Solovyev, or any of Solovyev’s companies) never entered into an agreement to 

transport the Formula by water from the United States to a foreign port.

As discussed above, an agreement to transport the Formula from New 

Jersey to Florida is not an agreement to “provide transportation by water of . . . 

cargo between the United States and a foreign country.” Therefore, any 

controversy about an alleged agreement to ship the Formula to Florida is not 

subject to the Shipping Act or the Commission’s jurisdiction.

I.D. at 26 (footnote omitted). 

2. Commission Order

The Commission Order, issued on July 16, 2019, (1) vacated “the ALJ’s dismissal of 

Crocus’s 46 U.S.C. § 41102(c) claim with respect to storage or other arrangements for the 

Formula from August 2013 to February 14, 2014” and remanded that claim “to the ALJ for 

further consideration consistent with the Final Rule issued by the Commission on December 12, 

2018;” (2) affirmed “the Initial Decision in all other respects and dismisse[d] all other claims 

against Respondents with prejudice;” and (3) denied “Crocus’s petition to reopen the 

proceedings and all relief requested in that petition.” Commission Order at 26. 

The Commission discussed the Formula boat, stating: 

 216 2 F.M.C.2d 2 F.M.C.2d
With respect to the Formula boat, Crocus’s claims relate to arrangements 

regarding: (1) the Formula prior to intended Florida transportation in February 

2014; and (2) transporting the boat to Florida. With a limited exception with 

respect to (1), we affirm the ALJ’s dismissal of Crocus’s § 41102(c) claims 

regarding the Formula.

Crocus alleged that Marine Transport violated § 41102(c) by mishandling

its responsibilities and overcharging it for arrangements related to the Formula.

See Exceptions at 1-2, 6-10. The Formula was stored in a New Jersey warehouse 

from August 2013 through at least July 2014. I.D. at 17-18. The ALJ dismissed

this claim because “[t]he evidence establishes that the third boat never left the 

United States; therefore, the third boat never entered into international commerce,

the Shipping Act does not apply, and the Commission does not have jurisdiction

to resolve disputes regarding its handling.” Id. at 1-2. The ALJ further found that 

the parties “never entered into an agreement to transport the Formula by water

from the United States to a foreign port.” Id. at 26. The ALJ did not otherwise

address the merits of Crocus’s claims about the Formula. See id. 

The parties’ arguments before the ALJ, and on appeal, focused on whether 

there was an express or implied contract to transport the Formula overseas. In

particular, in its exceptions, Crocus argues that there was an implied contract, and 

Respondents dispute that assertion. Exceptions at 2, 7-13; Reply at 3-12. The

parties thus assume (and the I.D. could be read to hold) that the existence of a 

contract is critical to § 41102(c) liability. 

The relevant inquiry here is not, however, limited to whether there was a 

contract for overseas shipment. Nor was the ALJ’s focus on whether the Formula

left the United States or had an agreement for overseas shipment clearly linked to

the Shipping Act or precedent, and it unduly narrows the scope of the inquiry to

two factors. The approach supported by the text of § 41102(c) and Commission

caselaw asks: was the respondent acting as a regulated entity with respect to the 

conduct at issue? See supra at 13-14. 

The inquiry here should have been: was Marine Transport acting as an

OTI with respect to the Formula boat from August 2013 (when it was purchased) 

to February 2014 (when Crocus began to inquire about domestic transportation of

the boat). This fact-intensive analysis takes into account the statutory definition of 

OTI (and in particular, NVOCC), and evidence about the parties’ conduct during 

that time frame. See, e.g., Worldwide Relocations—Possible Violations of the 

Shipping Act, 32 S.R.R. 495, 503, 2012 FMC LEXIS 23, *23-27 (FMC 2012); 

Tienshan, [Inc. v. Tianjin Hua Feng Transport Agency Co., Ltd., 31 S.R.R. 1831, 

1842-43, 2011 FMC LEXIS 9, *39-42 (ALJ 2011)]. 

Whether the Formula was actually transported to a foreign port or the 

subject of a contract to do so are highly relevant to this analysis, but not

necessarily determinative. For instance, the Commission has determined that a 

 217 2 F.M.C.2d 2 F.M.C.2d
broad swath of conduct falls within the scope of NVOCC activities. See 46 C.F.R.

§ 515.2(k). This determination is made more difficult where, as here, the parties

seem to operate without much documentation and/or respect for corporate or other

formalities. 

Because the ALJ did not clearly apply this analytical approach, the 

Commission vacates the ALJ’s dismissal of the § 41102(c) claim regarding the 

Formula boat with respect to the time period from August 2013 to February 14, 

2014, and remands so that the ALJ can determine whether Marine Transport was

acting as an OTI or otherwise address the elements of § 41102(c). 

Commission Order at 20-22 (heading omitted). 

On July 22, 2019, the proceeding was reassigned to the undersigned and a remand 

scheduling order was issued. On August 9, 2019, at Crocus’s request, a revised remand 

scheduling order was issued. Crocus’s remand brief and appendix were filed on September 27, 

2019. MTL’s remand opposition brief and exhibits were filed on October 28, 2019. Crocus’s 

remand reply brief and appendix were filed on November 14, 2019. The parties timely filed their 

remand briefs and did not request any additional discovery. 

C. Arguments of the Parties

Complainants allege that MTL acted as an OTI with regard to the Formula boat and that 

while acting as an OTI, MTL violated section 41102(c) with respect to storage or other 

arrangements for the Formula boat during the relevant time period. Remand Brief at 2-55. In 

their reply, Complainants contend that MTL’s failure to follow the remand scheduling order 

instructions to address only the narrow issue remanded by the Commission concedes the issue; 

the Commission’s use of precedent does not bar Crocus from seeking relief; MTL’s unjust and 

unreasonable practices, which occurred on a normal, customary, and continuous basis, are selfevident; MTL’s arguments regarding causation do not address the evidence and issues raised in 

Crocus’s remand brief; Crocus established that MTL acted as an OTI and that Solovyev’s actions 

as agent bind MTL as principal; and that MTL’s proffered invoice should be summarily 

disregarded. Remand Reply at 2-17. 

MTL asserts that the allegations in the complaint fall after the time period under 

consideration in this remand; Crocus failed to delineate an unjust or unreasonable practice and 

failed to allege that such practice was normal, customary, and continuous; Crocus failed to 

establish proximate cause; and MTL never acted as an OTI for the Formula boat as MTL did not 

deal with Crocus. Remand Opposition at 1-9. 

D. Evidence

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 initial decision on 

remand is based on the pleadings, exhibits, letter briefs, briefs, proposed findings of fact and 

 218 2 F.M.C.2d 2 F.M.C.2d
conclusions of law, and replies thereto, as well as the remand briefs and exhibits filed by the 

parties. 

This initial decision on remand 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 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. 

Many facts in this proceeding are disputed and it is not necessary to resolve disputes 

regarding facts that are not determinative. In addition, all relevant evidence is considered, even if 

the evidence is outside of the time period at issue. Communication, including invoices, sent after 

February 14, 2014, may be relevant to the intent of the parties during the time period at issue and 

are given due consideration. Specific findings of fact on remand are in section two, prior to the 

analysis and conclusions of law in part three, and the order in part four. 

II. REMAND FINDINGS OF FACT 

The Commission affirmed the initial decision in all respects except for the section 

41102(c) claim against MTL regarding the Formula boat and did not vacate any of the findings 

of fact in the initial decision. Commission Order at 2. Therefore, the findings of fact in the initial 

decision (“ALJFF”) are adopted. The findings relevant to the issues on remand, including 

whether MTL was acting as an OTI with respect to the Formula boat from August 2013 to 

February 14, 2014, are restated in this decision for ease of reference. New findings are included 

in subsection C below (“ALJFFR”). 

A. General Findings of Fact

1. Alexander Safonov (Safonov) is the 100% owner of complainants Crocus Investments, 

LLC and Crocus FZE. ALJFF 2, 4. 

2. Safonov is the co-owner of Middle East Asia Alfa, FZC (“Middle East Asia”), not a party 

to this proceeding, and had decision-making rights for the company. ALJFF 5. 

3. Safonov formed Middle East Asia with Oleg Bortsov to purchase used boats in the 

United States and ship the boats overseas for repair and sale in Dubai. ALJFF 6. 

4. “[T]here was agreement between Crocus FZE and company, Middle East Asia Alfa, that 

I [Safonov], as Crocus FZE, invest my money into Middle East Asia Alfa.” ALJFF 8. 

5. Middle East Asia employed Andrey Tretyakov (“Tretyakov”) as an associate in Dubai 

and Tretyakov also owned an interest in Middle East Asia. ALJFF 9-10. 

 219 2 F.M.C.2d 2 F.M.C.2d
6. In business situations, Safonov sometimes acts as Crocus Investments, sometimes as 

Crocus FZE, and sometimes as Middle East Asia. ALJFF 13.

7. Middle East Asia sold seven boats in Dubai that had been purchased in the United States. 

ALJFF 11. 

8. Respondent MTL is licensed by the Commission as a non-vessel-operating common 

carrier, license number 018709. ALJFF 14. 

9. Alla Solovyeva is the owner of MTL. ALJFF 16. 

10. At the time the relevant events occurred, Respondent Aleksandr Solovyev and Alla 

Solovyeva were husband and wife, but separated. ALJFF 17. 

11. Solovyeva is the sole owner, officer, and director of Car Express & Import, Inc. (“Car 

Express”). ALJFF 20.

12. At the request of customers, Car Express purchases automobiles and boats from auctions 

and arranges on behalf of that customer for the transportation of the automobile or boat 

from the United States to a foreign country. ALJFF 21. 

 

13. Solovyeva is the sole owner, officer, and director of Respondent Royal Finance Group, 

Inc. (“RFG”). ALJFF 22.

14. Solovyeva is the owner, officer, and director of World Express & Connection, Inc. 

(“World Express”). ALJFF 23. 

15. World Express is a warehouse company providing loading and storage services for 

vehicles, boats, and other cargo, including for ocean transportation from the United States 

to foreign ports. ALJFF 24. 

16. World Express is located at 63 New Hook Road, Bayonne, NJ 07002. ALJFF 25. 

17. MTL’s tariff provides that MTL’s container freight station/container yard (“CFS/CY”) 

“may be a designated warehouse. Shipper at its own expense, will deliver its vehicle to 

[MTL’s] designated warehouse for loading into the container for movement to the U.S. 

load port.” ALJFF 26. 

18. MTL uses World Express as its CFS/CY. ALJFF 27.

19. At times, Solovyev or one of his companies acts as agent for MTL. ALJFF 28.

20. Safonov engaged Solvyev and his three companies to perform services for Safonov and 

his three companies to purchase used boats in the United States and ship the boats to 

Dubai for repair and resale. ALJFF 29. 

21. Safonov and Solyvyev would view boats together online and Safonov would decide 

which boats to purchase. ALJFF 31. 

 220 2 F.M.C.2d 2 F.M.C.2d
22. All of the boats were purchased from the auction company Copart, a company that 

conducts Internet auctions of vehicles and boats in part by posting photographs and 

descriptions of the vehicles and boats online. ALJFF 30 and 32. 

23. Car Express was a member of Copart and was able to purchase boats from Copart on behalf 

of buyers. ALJFF 33. 

24. When Safonov wanted Solovyev to purchase a boat, RFG would often pay for the boat and 

incur other fees related to the purchase. ALJFF 34.

25. Safonov purchased about ten boats using Solovyev’s services. ALJFF 39. 

26. After purchase from Copart, the boats would be transported to the World Express 

warehouse. ALJFF 41. 

27. Solovyev/Car Express, as agent for MTL, would arrange for the shipment of the boats to 

Dubai. ALJFF 42. 

28. Other than the three boats at issue in this proceeding, Complainants did not have any 

problems with boats purchased and shipped to Dubai using Solovyev and his companies. 

ALJFF 43. 

29. MTL’s tariff states: “Carrier provides 30 calendar days free storage prior for vehicles, 

trucks and boats received for US export shipment at its CFS/CY as listed herein. Beyond 

30 days, storage charges per day apply as follows: A. STORAGE CHARGES AT 

BAYONNE, NJ . . . Boats: USD 20 per day.” ALJFF 103. 

B. Findings Related to the Formula Boat

30. On August 7, 2013, Car Express purchased a 2010 Formula boat 34 PC, VIN 

TNRD7870C010, for Safonov for a total of $56,280. ALJFF 74. 

31. Safonov bought the Formula boat with the intention of sending it to Dubai for repair and 

resale. ALJFF 75.

32. On August 7, 2013, RFG sent invoice 1189AT to Alexander Safonov, Crocus 

Investments, for the purchase of a Formula boat 34 PC, VIN TNRD7870C010. ALJFF 

76. 

33. The RFG invoice indicates that Alexander Safonov, Crocus Investments, was charged 

$56,280 for the Formula and $3,500 for delivery, a total of $59,780. ALJFF 77. 

34. On August 7, 2013, RFG sent invoice 1189AT to Andrey Tretyakov, Dubai, UAE, 

Middle East Asia for the purchase of the Formula. ALJFF 78.

35. The RFG invoice indicates that Andrey Tretyakov, Dubai, UAE, Middle East Asia, was 

charged $56,280 for the Formula, $3,500 for delivery, $12,000 for loading/shipping to 

 221 2 F.M.C.2d 2 F.M.C.2d
Dubai, $500 for commission, $500 for documentation, and $4,500 for a trailer, a total of 

$77, 280. ALJFF 79. 

36. On August 9, 2013, Crocus Investments wired $59,780 to RFG to pay for the Formula 

($56,280.00) and the delivery to the intended port of loading ($3,500). ALJFF 80. 

37. The Formula required a trailer for ocean shipment. ALJFF 81.

38. In November 2013, Solovyev told Safonov he found a trailer for the Formula but Safonov 

did not like the trailer. ALJFF 83. 

39. In December 2013, Solovyev found another trailer for the Formula that Safonov found 

acceptable. ALJFF 84. 

40. On December 3, 2013, RFG issued invoice #1204AS to Crocus FZE in the amount of 

$12,000 for loading and shipping the Formula to Dubai, $500 for commission, and $500 

for documentation, a total of $13.000. ALJFF 85. 

41. On December 3, 2013, RFG issued invoice #1204AS to Crocus FZE in the amount of 

$4,950 for a boat trailer 2005 NTTRL VIN LW95141 for the Formula. ALJFF 86. 

42. On December 4, 2013, Crocus FZE wired $4,950 to RFG to pay for boat trailer 2005 

NTTRL VIN LW95141. ALJFF 89. 

43. Safonov reached the conclusion that Tretyakov, the Middle East Asia employee in Dubai, 

“started to become a crook.” ALJFF 90.

44. Safonov decided that he did not want to deal with “crooks,” so in February 2014 he 

instructed Solovyev to ship the Formula to Miami. ALJFF 91. 

45. On February 14, 2014, Safonov sent an email to Solovyev stating: “I am sending you the 

name of the company in Florida – from which you have received the money for Formula34 – please prepare all documents for the boat reflecting this company’s information and 

send me all copies, ok? Do you know if copies of the documents will be enough to 

transfer Formula to Florida? It is good that we did [not] have time to send it to Dubai.” 

ALJFF 92 (citation omitted).

46. On July 17, 2014, Safonov sent an email to Solovyev stating: “Aleksandr – please from 

you to Ft. Lauderdale – Formula-34 PC, + 2 boats that arrived from Dubai.” ALJFF 93. 

47. On August 13, 2014, Solovyev sent Safonov an email stating:

Alexander, your attention to unpaid invoices for your boats! 

[Unfortunately] because of non-payment, we are not able to hold 

your boats anymore in our storage facility and have to cover all 

expenses of their storage, not later than Monday, 18th of August of 

year 2014! Your boat Formula has been stored in our storage 

facility for more than a year? This will not work! Therefore, 

 222 2 F.M.C.2d 2 F.M.C.2d
immediately I request to cover all your expenses! If you need help 

delivering the boats to Miami, our prices are as follow: Monterey 

and Chaparral – for $3,500 each! Boat Formula to Miami - 

$17,000. 

ALJFF 96.

48. On August 13, 2014, Solovyev (RFG) sent an invoice to Crocus Investments for 

$38,859.39 for 369 days of storage of the Formula. ALJFF 97. 

C. New Findings of Fact

49. The Formula boat was purchased and transported to the World Express warehouse, 

owned by Solovyev, for storage. See CX 256. 

50. MTL issued an invoice to RFG for storage charges in the amount of $39,409.93. Remand 

Brief at App. H. 

51. RFG issued an invoice to Crocus Investments totaling $39,409.93 with $38,859.39 for 

369 days of storage of the Formula boat and $550 for unloading from the trailer. The 

storage fee for the Formula boat was based on storage charges of $105.31 per day ($9.60 

for 1 linear meter per day x 10.97 linear meters). CX 106 (duplicate at Remand Brief at 

App. G). 

52. The daily storage charged by RFG for MTL exceed the storage charges listed in MTL’s 

tariff for boats received for U.S. export shipment. See ALJFF 103, CX 106. 

53. All payments by Complainants related to the Formula boat were made to RFG, as the 

billing agent for Solovyev and MTL. See ALJFF 34, 80, 89. 

54. MTL did not issue any shipping documents for transportation of the Formula boat to 

Dubai. See ALJFF 92, 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., 30 S.R.R. 991, 997-99 (FMC 2006); see also Cargo One, Inc. v. 

Cosco Container Lines Co., 28 S.R.R. 1635, 1645 (FMC 2000). Complainant alleges a violation 

of the Shipping Act within the Commission’s jurisdiction. 

2. Burden of Proof

 223 2 F.M.C.2d 2 F.M.C.2d
To prevail in a proceeding to enforce the Shipping Act, a complainant has the burden of 

proving by a preponderance of the evidence that the respondent violated the Act. 5 U.S.C. 

§ 556(d) (“Except as otherwise provided by statute, the proponent of a rule or order has the 

burden of proof.”); 46 C.F.R. § 502.203; Exclusive Tug Franchises – Marine Terminal 

Operators Serving the Lower Mississippi River, 29 S.R.R. 718, 718-19 (ALJ 2001). “[A]s of 

1946 the ordinary meaning of burden of proof was burden of persuasion, and we understand the 

APA’s unadorned reference to ‘burden of proof’ to refer to the burden of persuasion.” Dir., 

Office of Workers’ Comp. Programs v. Greenwich Collieries, 512 U.S. 267, 276 (1994). The 

party with the burden of persuasion must prove its case by a preponderance of the evidence. 

Steadman v. SEC, 450 U.S. at 102. When the evidence is evenly balanced, the party with the 

burden of persuasion must lose. Greenwich Collieries, 512 U.S. at 281. 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 S.S. Corp. v. General Foundries Inc., 26 S.R.R. 1173, 1180 (ALJ 1993), adopted in 

relevant part, 26 S.R.R. 1424 (FMC 1994). 

B. Relevant Law 

 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 two types of ocean 

transportation intermediaries. “The term ‘ocean transportation intermediary’ means an ocean 

freight forwarder or a non-vessel-operating common carrier.” 46 U.S.C. § 40102(20). “The term 

‘ocean freight forwarder’ means a person that – (A) in the United States, dispatches shipments 

from the United States via a common carrier and books or otherwise arranges space for those 

shipments on behalf of shippers; and (B) processes the documentation or performs related 

activities incident to those shipments.” 46 U.S.C. § 40102(19). 

 “The term ‘non-vessel-operating common carrier’ means a common carrier that – 

(A) does not operate the vessels by which the ocean transportation is provided; and (B) is a 

shipper in its relationship with an ocean common carrier.” 46 U.S.C. § 40102(17). To be an 

NVOCC, the entity must meet the Shipping Act’s definition of 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:

Ocean transportation intermediary means an ocean freight forwarder or a nonvessel-operating common carrier. For the purposes of this part, the term

 224 2 F.M.C.2d 2 F.M.C.2d
(1) Ocean freight forwarder (OFF) means a person that – (i) In the United 

States, dispatches shipments from the United States via a common carrier 

and books or otherwise arranges space for those shipments on behalf of 

shippers; and (ii) Processes the documentation or performs related 

activities incident to those shipments; and

(2) Non-vessel-operating common carrier (NVOCC) means a common carrier 

that does not operate the vessels by which the ocean transportation is 

provided, and is a shipper in its relationship with an ocean common 

carrier.

46 C.F.R. § 515.2(m). 

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 Commission promulgated regulations providing examples of NVOCC services 

performed by OTIs. 

Non-vessel-operating common carrier services refers to the provision of 

transportation by water of cargo between the United States and a foreign country 

for compensation without operating the vessels by which the transportation is 

provided, and may include, but are not limited to, the following: 

(1) Purchasing transportation services from a common carrier and offering 

such services for resale to other persons;

(2) Payment of port-to-port or multimodal transportation charges; 

(3) Entering into affreightment agreements with underlying shippers;

(4) Issuing bills of lading or other shipping documents; 

(5) Assisting with clearing shipments in accordance with U.S. government 

regulations; 

(6) Arranging for inland transportation and paying for inland freight charges 

on through transportation movements; 

 225 2 F.M.C.2d 2 F.M.C.2d
(7) Paying lawful compensation to ocean freight forwarders;

(8) Coordinating the movement of shipments between origin or destination 

and vessel;

(9) Leasing containers;

(10) Entering into arrangements with origin or destination agents;

(11) Collecting freight monies from shippers and paying common carriers as a 

shipper on NVOCC’s own behalf. 

46 C.F.R. § 515.2(k).

The complaint alleges that Respondent violated section 41102(c) of the Shipping Act, 

which states: “A common carrier, marine terminal operator, or ocean transportation intermediary 

may not fail to establish, observe, and enforce just and reasonable regulations and practices 

relating to or connected with receiving, handling, storing, or delivering property.” 46 U.S.C. 

§ 41102(c). 

On September 7, 2018, the Commission issued a notice of proposed rulemaking “to 

obtain public comments on clarification and guidance regarding the Commission’s interpretation 

of the scope of 46 U.S.C. 41102(c) (section 10(d)(1) of the Shipping Act of 1984).” Notice of 

Proposed Rulemaking: Interpretive Rule, Shipping Act of 1984, 83 Fed. Reg. 45367 (Sept. 7, 

2018) (“NPRM”). In the notice of proposed rulemaking, the Commission stated inter alia: 

Specifically, the Commission is considering an interpretive rule consistent with 

Commission precedent . . . that would restore the scope of § 41102(c) to 

prohibiting unjust and unreasonable practices and regulations. These decisions 

require that a regulated entity engage in a practice or regulation on a normal, 

customary, and continuous basis and a finding that such practice or regulation is 

unjust or unreasonable to violate that section of the Shipping Act. 

NPRM, 83 Fed. Reg. at 45368 (emphasis in original, internal citations omitted). 

On December 17, 2018, the Commission issued a final rule adopting the September 7, 

2018, notice of proposed rulemaking without change. Final Rule, 83 Fed. Reg. 64478. Rule 

545.4, states: 

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;

 226 2 F.M.C.2d 2 F.M.C.2d
(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; see also Final Rule: Interpretive Rule, Shipping Act of 1984, 83 Fed. Reg. 

64478 (Dec. 17, 2018) (“Final Rule”). 

C. Discussion

1. Whether Respondent Acted as a Regulated Entity

The Commission remand requires the determination of whether Respondent MTL was 

acting as a regulated entity with regard to the Formula boat. To be a regulated entity under 

section 41102(c), MTL must have been acting as a common carrier, marine terminal operator, or 

ocean transportation intermediary. There is no allegation that MTL was an ocean common carrier 

or a marine terminal operator. Ocean transportation intermediaries may be ocean freight 

forwarders or NVOCCs. The initial decision found that for the first two boats at issue, MTL 

acted as an NVOCC when exporting the boats. 

Crocus alleges that MTL acted as an OTI with regard to the subject Formula boat. 

Remand Brief at 2-18. MTL asserts that it never acted as an OTI with respect to the Formula 

boat during the subject time period as MTL did not deal with Crocus and did not perform the 

OTI activities enumerated by the Commission in Rule 515.2(k) with regard to the Formula boat. 

Remand Opposition at 7-9. 

To conclude that an entity operated as an NVOCC, the entity must meet the Shipping 

Act’s definition of a common carrier; that is, it must hold 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, assume responsibility for the transportation from the port or point of 

receipt to the port or point of destination, and use 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); see also MAVL Capital Inc. v. Marine Transport 

Logistics and Dmitry Alper, 2020 FMC LEXIS 216, *8, FMC Docket No. 16-16, Memorandum 

Opinion and Order (“FMC Order”) at 11 (FMC Oct. 29, 2020).

The Commission has long relied on these three factors – holding itself out, assuming 

responsibility, and transportation by water – to identify a common carrier:

As a “common carrier” is defined in the Shipping Act, an NVOCC “holds out” to 

the “general public to provide transportation by water” and “assumes 

responsibility for the transportation from the port or point of receipt to the port or 

point of destination.” 46 U.S.C. §1702(6). The Commission has found that no 

single factor of an entity’s operation is determinative of its status as a common 

carrier. [River Parishes Co., Inc. v. Ormet Primary Aluminum Corp., 28 S.R.R. 

751, 763 (FMC 1999); Activities, Tariff Filing Practices and Carrier Status of 

 227 2 F.M.C.2d 2 F.M.C.2d
Containerships, Inc., 9 F.M.C. 56, 62-65 (FMC 1965) (“Containerships”)]. 

Rather, the Commission must evaluate the indicia of common carriage on a caseby-case basis. Id.

Rose Int’l, Inc. v. Overseas Moving Network Int’l, Ltd., 29 S.R.R. 119, 162 (FMC 2001); see also

Worldwide Relocations, 32 S.R.R. at 503. Each element will be discussed in turn.

a. Holding Itself Out

The first factor in determining whether an entity operated as an NVOCC is whether the 

entity “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.” 46 U.S.C. 

§ 40102(7)(A)(i). The Commission explained: 

The most essential factor is whether the carrier holds itself out to accept cargo 

from whoever offers to the extent of its ability to carry, and the other relevant 

factors include the variety and type of cargo carried, number of shippers, type of 

solicitation utilized, regularity of service and port coverage, responsibility of the 

carrier towards the cargo, issuance of bills of lading or other standardized 

contracts of carriage, and the method of establishing and charging rates. 

Rose Int’l, Inc., 29 S.R.R. at 162 (citation omitted). 

“The absence of solicitation does not determine that a carrier is not a common carrier.” 

Transp. by Mendez & Co., Inc., 2 U.S.M.C. 717, 720 (1944). Holding out can also be 

demonstrated by a course of conduct. Containerships, 9 F.M.C. at 62. It is sufficient if an entity 

“held out, by a course of conduct, that they would accept goods from whomever offered to the 

extent of their ability to carry.” Transp. by Southeastern Terminal & S.S. Co., 2 U.S.M.C. 795, 

796-797 (1946). Moreover, “the common carrier status depends on the nature of what the carrier 

undertakes or holds itself out to undertake to the general public rather than on the nature of the 

arrangements which it may make for the performance of its undertaken duty.” Bernhard Ulmann 

Co., Inc. v. Porto Rican Express Co., 3 F.M.B. 771, 778 (1952). 

Addressing the element of holding out to provide transportation by water between 

the United States and a foreign country for compensation, the Commission stated 

in Worldwide Relocations (FMC 2012) that an entity may hold out to the public 

“‘by the establishment and maintenance of tariffs, by advertisement and 

solicitation, and otherwise.’” Worldwide Relocations (FMC 2012), 32 S.R.R. at 

503 (citing Common Carriers by Water – Status of Express Companies, Truck 

Lines and Other Non-Vessel Carriers, 1 S.R.R. 292 (FMC 1961)). The 

Commission noted that it “has previously found that advertising and solicitations 

to the public are important factors in determining the issue of ‘holding out’ by an 

entity.” Id. 

EuroUSA Shipping, Inc. – Possible Violations of Section 10 of the Shipping Act of 1984 and the 

Commission’s Regulations, 32 S.R.R. 1906, 1913, 2013 FMC LEXIS 44, *13-14 (FMC 2013). 

 228 2 F.M.C.2d 2 F.M.C.2d
In this case, MTL was a licensed NVOCC which held itself out to provide transportation 

by water of cargo between the United States and foreign countries for compensation. The record 

shows a course of conduct between the parties wherein MTL acted as an NVOCC for the 

overseas shipment of Crocus’s boats, including the two other boats identified in the complaint. 

Although MTL argues that it did not deal directly with Crocus, the evidence shows that Solovyev 

was acting as MTL’s agent when shipping Safonov’s boats overseas, including arranging for 

transportation to the port of loading and coordinating the purchase of a trailer so that MTL could 

ship the Formula boat overseas. 

The evidence shows that when MTL first received the Formula boat in August of 2013, 

the intent of the parties was for it to be shipped to Dubai, as the other boats had been. ALJFF 74-

75. RFG sent invoices to Safonov at Crocus Investments for the purchase and delivery and to 

Tretyakov at Middle East Asia for the purchase, delivery, and shipping. ALJFF 76-79. In August 

of 2013, Crocus Investments wired $59,780 to RFG to pay for the Formula and its delivery to the 

intended port of loading. ALJFF 80. On December 4, 2013, Crocus, FZE wired $4,950 to RFG to 

pay for a boat trailer which was required for ocean shipment of the Formula. ALJFF 81, 89. It 

was not until February 14, 2014, when Safonov decided not to ship the Formula overseas, that 

the planned shipment changed from an international ocean shipment to a domestic shipment. 

Accordingly, the factor of holding out is established.

b. Assumes Responsibility

The second factor is whether the entity “assumes responsibility for the transportation 

from the port or point of receipt to the port or point of destination.” 46 U.S.C. § 40102(7)(A)(ii).

In Common Carriers by Water, [6 F.M.B. 245, 250 (1961)], the Federal Maritime 

Board noted that an entity may be considered a common carrier even if it attempts 

to disclaim liability because liability may be imposed by operation of law. 6 

F.M.B. at 256. However, “[a]ctual liability as a common carrier over the entire 

journey including the water portion is essential” to determine NVOCC status. Id.

Although the Commission has not focused on this aspect of common carrier 

status, favoring the “holding out” analysis, it remains an essential element of the 

“common carrier” definition in the Shipping Act. 46 U.S.C. § 40102([7])(A)(ii). 

In the Matter of the Lawfulness of Unlicensed Persons Acting as Agents for Licensed Ocean 

Transp. Intermediaries, 31 S.R.R. 185, 199 (FMC 2008) (Dye, dissent (favorably cited by 

reversing court)) (rev’d Landstar Express Am., Inc. v. FMC, 569 F.3d 493 (D.C. Cir. 2009)). The 

Commission’s jurisdiction over matters relating to transportation by water of cargo between the 

United States and a foreign country by a common carrier essentially begins when a common 

carrier assumes responsibility for transportation of the cargo and ends when the cargo is 

delivered to the consignee at the place of destination contemplated by the contract of carriage. 

See, e.g., Norfolk Southern R. Co. v. James N. Kirby, Pty Ltd., 543 U.S. 14, 23-27 (2004); 

Kawasaki Kisen Kaisha Ltd. v. Regal-Beloit Corp., 561 U.S. 89, 108 (2010); Mitsui O.S.K. 

Lines Lid. v. Global Link Logistics, 32 S.R.R. 126, 2011 FMC LEXIS 12, *56 (FMC 2011).

Issuing bills of lading may demonstrate a course of conduct sufficient to establish 

assumption of responsibility.

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Barbour’s course of conduct of issuing the seventy-four bills of lading to his 

customers proves that he held out to members of the general public that he 

provides transportation of cargo by water between the United States and foreign 

countries for compensation. The Barbour Shipping bills of lading also prove that 

Barbour assumed responsibility for the transportation of the cargo, and with the 

Liberty Global bills of lading, prove that the shipments were transported by water 

between the United States and a foreign port. 

Barbour – Possible Violations of Sections 8 and 19, 34 S.R.R. 959, 972, 2016 FMC LEXIS 1, 

*37-38 (ALJ 2016). 

The question here is whether MTL assumed responsibility for transporting the Formula 

boat overseas. The evidence shows that even though shipping documents to Dubai had not yet 

been issued, MTL assumed responsibility for the Formula boat when it accepted the Formula 

boat for overseas shipment, consistent with the course of conduct between the parties. In this 

case, the destination was changed prior to the Formula being shipped overseas but after MTL 

coordinated the delivery of the Formula to the port, billed Complainants through RFG, and 

Crocus Investments paid for the purchase and delivery to the port of loading. ALJFF 76-80. 

MTL assumed responsibility for the Formula boat when it accepted delivery of the boat in 

anticipation of shipping the Formula to Dubai. Accordingly, Complainants have established that 

MTL assumed responsibility for the Formula boat.

c. International Transportation by Water 

The third factor is whether the entity “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)(A)(ii). As the Commission has stated, “the intention of 

the shipper as to the ultimate destination at the time the cargo starts is the test of its character, 

though broken, transported by more than one carrier, or moving on through or local bills of 

lading.” Matson Navigation Co., Inc.–Transport. of Cargoes Between Ports and Points Outside 

Haw. and Islands Within the St. of Haw., 24 S.R.R. 979, 988 (1988) (quoting Intercoastal 

Investigation, 1935, 1 U.S.S.B.B. 400, 440 (1935)). 

Here, Safonov bought the Formula with the intention of sending it to Dubai for repair and 

resale. ALJFF 75. The evidence demonstrates that the intent of the parties from August 2013 to 

February 2014 was to ship the Formula from the United States to Dubai by water as had been 

done without issue for the other two boats. That intent changed on February 14, 2014, when 

Safonov changed the destination for the transportation to Florida. In an email communicating the 

change in plans for the boat to Solovyev, Safonov stated in pertinent part: “It is good that we did 

[not] have time to send it to Dubai.” ALJFF 92. Had the transportation to Dubai taken place as 

originally intended, MTL would have used a vessel operating on the high seas to perform the 

transportation from the United States to Dubai. Accordingly, the factor of international 

transportation by water is established.

Complainants have established that from August 2013 to February 2014, MTL was acting 

as an ocean transportation intermediary, an NVOCC, for the Formula boat. MTL, through 

Solovyev and RFG, dealt with Safonov and Crocus and performed OTI activities for the Formula 

 230 2 F.M.C.2d 2 F.M.C.2d
boat. Therefore, MTL was a regulated entity and the Commission has jurisdiction over this 

claim. 

2. Section 41102(c) Elements 

To establish a violation of section 41102(c), a complainant must demonstrate that the 

respondent is a regulated entity; the claimed acts or omissions occurred on a normal, customary, 

and continuous basis; the practice or regulation is connected with receiving, handling, storing, or 

delivering property; the practice or regulation is unjust or unreasonable; and the practice or 

regulation is the proximate cause of the claimed loss. 46 C.F.R. § 545.4. Each element is 

discussed in turn.

a. MTL Acted as an OTI

Because section 41102(c) governs the activities of common carriers, marine terminal 

operators, and ocean transportation intermediaries, to violate it, an entity must be a common 

carrier, marine terminal operator, or an ocean transportation intermediary within the meaning of 

the Shipping Act. As discussed above, the evidence shows that MTL acted as an NVOCC – a 

type of ocean transportation intermediary – for the Formula boat, a required element to 

demonstrate a section 41102(c) violation. 

b. Normal, Customary, and Continuous Basis 

The Commission adopted an interpretive rule explaining what constitutes regulations and 

practices under the Shipping Act:

In drafting the 1916 Act, and through its revisions and reenactment in 1984, 

Congress chose the word ‘practice’ and the phrase, ‘establish, observe, and 

enforce just and reasonable regulations and practices,’ to describe actions or 

omissions engaged in on a normal, customary, and continuous basis. From its 

origin and as recently as 2001, § 41102(c) was interpreted in line with this 

understanding. To find a violation of § 41102(c), the Commission consistently 

required that the unreasonable regulation or practice was the normal, customary, 

often repeated, systematic, uniform, habitual, and continuous manner in which the 

regulated common carrier was conducting business. This understanding as to what 

constitutes ‘regulations and practice’ under the Shipping Act is supported by 

multiple accepted rules of statutory construction. 

Final Rule, 83 Fed. Reg. at 64479 (internal citations omitted). 

Complainants have the burden to establish that the unjust and unreasonable acts in 

question occurred on a normal, customary, and continuous basis and thus were a “regulation or 

practice” by Respondent. As explained below, the record does not support a finding that MTL

unlawfully withheld property, committed conversion, charged unreasonable storage rates, or 

otherwise committed unjust or unreasonable acts on a normal, customary, and continuous basis. 

There is limited evidence regarding MTL’s normal and customary policies regarding 

storage rates and policies for boats. The record contains evidence regarding the three boats 

 231 2 F.M.C.2d 2 F.M.C.2d
initially at issue in this proceeding and shipments in a few other FMC proceedings. Regarding 

the other two boats at issue in this proceeding, there is no evidence of unjust or unreasonable acts 

prior to shipping the boats overseas as discussed in the initial decision and commission order. 

The appropriate charges for storage of these boats is also the subject of the related case currently 

pending in New Jersey federal court. 

Crocus points to two previous cases alleging that MTL violated section 41102(c): Best 

Way USA, Inc. v. Marine Transport Logistics and Samir Abusetta d/b/a Sammy’s Auto Sales v. 

JAX Auto Shipping and Marine Transport Logistics. Crocus also contends that this element is 

“self-evident.” Remand Reply at 6-7. MTL asserts that Crocus fails to allege that an 

unreasonable practice occurred on a normal, customary, and continuous basis. Remand 

Opposition at 3-6. Two other pending cases against MTL, Docket No. 16-16 and Docket No. 20-

12, have not yet decided the question of whether MTL violated section 41102(c). 

In Best Way, the Commission affirmed a Settlement Officer’s finding that MTL violated 

section 41102(c) for a 2007 shipment, in part based on unlawful storage charges at origin as well 

as en route. Best Way USA, Inc. v. Marine Transport Logistics, 33 S.R.R. 13, FMC Docket No. 

1901(I), Order Affirming Settlement Officer Decision (“FMC Order”) at 9 (FMC Nov. 8, 2013). 

The Best Way decision was issued prior to the 41102(c) Interpretive Rule and stands for the 

proposition that the NVOCC is responsible for increases in shipping costs after agreeing to 

transport goods. Best Way, FMC Order at 3-4. In Best Way, it does appear that there was a 

violation of section 41102(c) based, in part, on unreasonable storage charges assessed prior to a 

vehicle being exported. Best Way, FMC Order at 3. The Best Way case, decided prior to the 

interpretive rule, does not suggest that this was part of MTL’s business model or that it occurred 

on a normal, customary, and continuous basis.

In Samir Abusetta, Jax Auto Shipping was found liable for violating the Shipping Act. 

Samir Abusetta d/b/a Sammy’s Auto Sales v. Jax Auto Shipping and Marine Transport Logistics,

FMC Docket No. 1932(I), Order Reversing, In Part, Decision of the Settlement Officer and 

Issuing Reparations (“FMC Order”) (FMC Oct. 18, 2016). The Commission stated that “to 

determine whether Jax violated § 41102(c), the Commission must analyze whether it acted as an 

OTI in connection with Claimant’s shipment.” Samir Abusetta, FMC Order at 6. However, the 

Commission also found that the claimant hired Jax, not MTL, to ship the cargo and therefore that 

MTL did not violate the Shipping Act. Samir Abusetta, FMC Order at 7. In addition, this case 

was decided prior to the interpretive rule and the issue of normal, customary, and continuous 

basis is not addressed. 

Therefore, there is only one other similar violation identified and that was for a shipment 

in 2007, many years prior to the shipment in this case. The finding in Best Way that the storage 

charge for the one shipment was unreasonable and the finding below that the storage charge for 

this one shipment was unreasonable are not sufficient to establish that MTL’s storage rates were 

unreasonable on a normal, customary, and continuous basis. Indeed, it is clear from the course of 

conduct between these parties that this shipment was not the normal and customary arrangement 

because of the delay in finding an appropriate trailer, the delay in shipping the boat, and the 

change in destination. Thus, the evidence of unjust and unreasonable acts by Respondent does 

not rise to a level constituting a “regulation and practice” as described by the Commission. 

 232 2 F.M.C.2d 2 F.M.C.2d
The evidence of record does not support a finding that any unjust and unreasonable acts 

by Respondent extended beyond these two instances involving one car in Best Way and the boat 

at issue in this proceeding. Accordingly, Complainants fail to meet their burden to demonstrate 

that the unjust and unreasonable acts by MTL occurred on a normal, customary, and continuous 

basis, a prerequisite for a successful claim for reparations under the section 41102(c) interpretive 

rule. 46 C.F.R. § 545.4; Final Rule, 83 Fed. Reg. at 64479. 

c. Connected with Receiving, Handling, Storing, or Delivering 

Property 

The evidence demonstrates that when the Formula boat was purchased in August of 2013, 

the intent was to ship it to Dubai but there were delays, in part due to finding a suitable trailer 

which was required for ocean shipment. ALJFF 74-75, 81, 83-84. While the Formula awaited 

shipment, MTL put it in storage. In February of 2014, Safonov decided to change the destination 

from Dubai to Florida, stating “It is good that we did [not] have time to send it to Dubai.” ALJFF 

92 (quoting CX 055). On August 13, 2014, Solovyev sent Safanov an invoice for 369 days of 

storage of the Formula and an email regarding unpaid invoices for three boats, stating “because 

of non-payment, we are not able to hold your boats anymore in our storage facility and have to 

cover all expenses of their storage.” ALJFF 96 (quoting CX 103). Accordingly, the evidence 

shows that the alleged violation was connected to receiving, handling, storing, or delivering 

property. 

d. Unjust and Unreasonable

The complaint alleges that section 41102(c) was violated because MTL unlawfully 

withheld “Complainant’s property (boats) and/or commit[ed] conversion against the 

Complainant’s property.” Complaint at 5. Complainant points to the similarity between this case 

and Best Way to argue that MTL assessed unlawful storage charges. Remand Brief at 50. In their 

remand brief, Crocus alleges that MTL “held complainant’s cargo based on unlawful charges for 

storage,” MTL knowingly failed to inform Complainants as to the accrual of storage charges for 

the boat, and Respondent “failed to complete some of their duties to secure delivery of 

claimants’ property such as finding a suitable trailer so that the Formula boat could be exported.” 

Remand Brief at 29, 45. 

MTL contends that the invoices for storage charges were not issued until August of 2014, 

well after the subject time period, and therefore occurred after the shipping aspect of the 

transaction had been completed. Remand Opposition at 1-3. Moreover, MTL asserts that “Crocus 

has not delineated an unjust and unreasonable practice on the part of MTL before this transaction 

turned to a domestic one.” Respondent Remand Opposition at 3. 

In this case, Respondent stored the Formula boat from August 2013, when it was 

purchased, though at least July 2014. Approximately half of that time was while the parties 

anticipated international shipment. The storage fee was for the entire 365 days of storage, 

encompassing both the time when international export was anticipated and when domestic 

transportation was anticipated. Only the time until February 14, 2014, would be under the 

jurisdiction of the Commission.

 233 2 F.M.C.2d 2 F.M.C.2d
The evidence also shows that the tariff rate for storage of boats was $20, which is 

significantly below the $105.31per day charged to Crocus. ALJFFR 50-52. MTL’s tariff states: 

“Carrier provides 30 calendar days free storage prior for vehicles, trucks and boats received for 

US export shipment at its CFS/CY as listed herein. Beyond 30 days, storage charges per day 

apply as follows: A. STORAGE CHARGES AT BAYONNE, NJ . . . Boats: USD 20 per day.” 

ALJFF 103 (quoting CX 178). The Formula boat was received for export shipment. No 

justification is provided for the higher charge and there is no indication that Complainants were 

provided notice of the charge before receiving the storage bill. While MTL is not expected to 

store the boat for free, the record supports a finding that the $105.31per day charge, imposed 

without notice after a year, is unreasonable. If the other elements of section 41102(c) were met, 

then this element would be met as well, as Complainants have established that the storage charge 

was unjust and unreasonable.

e. Proximate Cause of Loss 

Crocus alleges in the complaint that the boats were never delivered to Crocus and are 

presumably in MTL’s possession. Complaint at 5. In their brief filed prior to the initial decision, 

Crocus asserted that they are entitled to the amount paid for the Formula boat ($59,780) and its 

trailer ($4950). Initial Brief at 9 (filed Jan. 14, 2016). If the other elements of section 41102 were 

met, then this element would be met as well as the failure to deliver the Formula boat and the 

storage charges assessed were the proximate cause of the loss claimed by Crocus. 

3. Conclusions

The Commission has jurisdiction over this claim because MTL was acting as a regulated 

entity when it assumed responsibility for the Formula boat from August 2013 to February 2014. 

Because Crocus fails to establish that the conduct by MTL occurred on a normal, customary, and 

continuous basis, Crocus fails to demonstrate all of the interpretive rules’ required elements for 

successfully establishing a section 41102(c) claim for reparations. Complainants’ claim for 

reparations must therefore be denied and dismissed. 

IV. ORDER

Upon consideration of the record herein, the arguments of the parties, and the conclusions 

and findings set forth above, it is hereby 

ORDERED that Crocus’s complaint be DISMISSED WITH PREJUDICE. 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 

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