Antitrust Law Daily Wrap Up, ANTITRUST—D.N.J.: Shipping Act preempts price fixing conspiracy claims by vehicle carrier services, (Aug 31, 2015)

By Greg Hammond, J.D.

A group of ocean shipping companies obtained dismissal of claims that they conspired to fix and increase the prices for vehicle carrier services to and from the United States. The federal district court in Newark found that the Shipping Act of 1984 barred the Clayton Act claims and preempted state law claims under a theory of conflict preemption (In re Vehicle Carrier Services Antitrust Litigation, August 28, 2015, Salas, E.).

Companies that directly purchased vehicle carrier services and indirect purchasers—consisting of auto dealers, truck and equipment dealers, and end-payors—claimed that the defendant ocean shipping companies entered into various collusive, secret agreements to fix and increase the prices for vehicle carrier services. The shipping companies allegedly agreed to coordinate price increases, agreements not to compete, and agreements to restrict capacity. The companies that directly purchased vehicle carrier services sought treble damages and costs of suit under Section 4 of the Clayton Act for violating Section 1 of the Sherman Act. Similarly, the auto dealers, truck and equipment dealers, and end-payors sought equitable and injunctive relief under Section 16 of the Clayton Act, for violation of Section 1 of the Sherman Act, as well as treble damages and costs of suit under various state antitrust, consumer protection, and unjust enrichment laws. The defendants moved to dismiss.

Clayton Act claims barred. The court first considered whether the Clayton Act claims for damages and injunctive relief were barred by the Shipping Act. While the defendants conceded that the Shipping Act prohibits Clayton Act claims for price fixing and market allocation, they argued that agreements to restrict capacity are outside the purview of the Act. The court disagreed, finding that a plain reading of the Shipping Act demonstrates that capacity restrictions are prohibited and that the purchasers’ claims for damages and injunctive relief are therefore barred. Specifically, the court determined that capacity restrictions are covered in the “Application” section of the Shipping Act and that such agreements are therefore required to be filed with the Federal Maritime Commission (FMC). Second, because the ocean common carriers are prohibited from operating under an unfiled agreement that is required to be filed with the FMC, the capacity restrictions allegations involved conduct prohibited by the Shipping Act. The Clayton Act claims were therefore dismissed with prejudice.

State law claims preempted. The shipping services companies also claimed that the state antitrust and consumer protection claims were impliedly preempted by the Shipping Act. The court agreed, noting that the Shipping Act’s first stated purpose is to “establish a nondiscriminatory regulatory process for the common carriage of goods by water in the foreign commerce of the United States with a minimum of government intervention and regulatory costs.” The court considered legislative history and case law, concluding that the proposed application of state law conflicts with the congressional purpose of minimizing government intervention and regulatory costs and that allowing private actions under a patchwork of state laws for the same exact conduct that is exempt from federal antitrust law directly undermines the “certainty and predictability” Congress sought to achieve in passing the Shipping Act. The motions to dismiss the state law claims were therefore granted.

The case number is 13-3306 (ES).

Attorneys: Hollis Lee Salzman (Robins Kaplan LLP) and James E. Cecchi (Carella Byrne Cecchi Olstein Brody & Agnello, PC) for F. Ruggiero & Sons, Inc. Gerard V. Mantese (Mantese Honigman Rossman & Williamson PC) and Peter S. Pearlman (Cohn, Lifland, Pearlman, Herrmann & Knopf, LLP) for Martens Cars of Washington, Inc., Hudson Charleston Acquisition, LLC, Hudson Nissan, and John O'Neil Johnson Toyota, LLC. Eric R. Fish (Baker Hostetler LLP) for NYK Line North America Inc. Nippon Yusen Kabushiki Kaisha, pro se. Benjamin F. Holt (Hogan Lovells US LLP) and Roberto A. Rivera-Soto (Ballard Spahr) for Wilh Wilhelmsen Holding ASA and Wilh Wilhelmsen ASA. Adam Michael Pergament (Arnold & Porter LLP) for Mitsui O.S.K. Lines, Ltd.

Companies: F. Ruggiero & Sons, Inc.; Martens Cars of Washington, Inc.; Hudson Charleston Acquisition, LLC; Hudson Nissan; John O'Neil Johnson Toyota, LLC; NYK Line North America Inc.; Nippon Yusen Kabushiki Kaisha; Wilh Wilhelmsen Holding ASA; Wilh Wilhelmsen ASA; Mitsui O.S.K. Lines, Ltd.

Cases: Antitrust NewJerseyNews