United States: Third Circuit Considering Federal Court Damages Immunity For Ocean Shipping Companies

Last Updated: November 30 2016
Article by David C. Kully and Eric Lee

David C. Kully is a Parter and Eric Lee is an Associate both in our Washington, D.C. office.


  • The U.S. Court of Appeals for the Third Circuit heard oral arguments on Nov. 17, 2016, on an appeal of the dismissal of private actions brought to recover damages for an antitrust conspiracy among ocean common carriers discovered and prosecuted by the U.S. Department of Justice (DOJ) beginning in 2014.
  • Although it is not certain how the Third Circuit will ultimately rule, its three-judge panel appeared inclined to affirm the district court's dismissal. If so, plaintiffs would be required to pursue damages claims for antitrust violations only through Federal Maritime Commission administrative proceedings.

The Shipping Act of 1984 grants limited immunity under the antitrust laws to vessel-operating common carriers that enter certain agreements, including price-fixing agreements, so long as the agreements are filed in advance with the Federal Maritime Commission (FMC). See 46 U.S.C. §§40301, 40307(a). Unfiled (or "secret") price-fixing agreements among vessel-operating common carriers, however, are not immune, and the U.S. Department of Justice (DOJ), beginning in February 2014, prosecuted under Section 1 of the Sherman Act a number of ocean common carriers for such a secret, unfiled agreement – a conspiracy to eliminate competition in the provision of shipping services for roll-on, roll-off cargo, such as cars and trucks.

The disclosure of the DOJ's criminal antitrust investigation in September 2012 precipitated the filing of a number of private civil antitrust cases, which were coordinated and consolidated for pretrial proceedings on Oct. 18, 2013, in the U.S. District Court for the District of New Jersey. On Aug. 28, 2015, the district court granted the defendant shipping companies' motion to dismiss, finding the Shipping Act barred private damages actions alleging antitrust violations. In re Vehicle Carrier Servs. Antitrust Litig., MDL No. 2471 (D.N.J. Aug. 28, 2015). Plaintiffs appealed to the U.S. Court of Appeals for the Third Circuit, which heard oral arguments on Nov. 17, 2016. The Third Circuit judges expressed obvious and significant skepticism of the plaintiffs' arguments during the oral argument. While it is impossible to know for certain how the Third Circuit will ultimately rule, its affirmance of the district court's decision would leave plaintiffs interested in continuing to pursue damages with the FMC's administrative process as their only forum. This is significant for all parties because plaintiffs in FMC actions can recover only double damages for harm from anticompetitive conduct – instead of the treble damages they can obtain under antitrust cases in federal court.

The district court based its finding that the defendants were immune from federal court damages actions on its interpretation of the Shipping Act. Section 40307(d) of the Shipping Act bars private actions brought under Section 4 of the Clayton Act to recover damages "for conduct prohibited" by the Shipping Act. The district court found that the antitrust conspiracy for which defendants were prosecuted by the DOJ constituted an agreement that, under Section 40301(a), defendants should have filed with the FMC. When defendants pursued their secret conspiracy, the district court found that the carriers impermissibly operated pursuant to an unfiled agreement in violation of the Shipping Act – in other words, that they engaged in "conduct prohibited" by the Shipping Act – and Section 40307(d) blocked plaintiffs' attempt to recover damages caused by that unfiled agreement. The district court also found that the immunity granted to antitrust defendants under the Shipping Act extended to actions brought under state antitrust laws.

It is impossible to say how the Third Circuit will rule but, to the extent any insights can be drawn from the judges' questions, they appear to be at least contemplating affirming the district court's decision. One of the judges on the three-judge panel implied in a question that plaintiffs' current pursuit of actions at the FMC for violations of the Shipping Act effectively conceded that the Shipping Act required plaintiffs to follow the FMC's processes. Another observed that the purpose of the Shipping Act was to expand antitrust immunity for ocean common carriers to put them on equal footing with foreign counterparts. That judge also suggested the extensive federal regulation in the maritime area implied federal pre-emption of inconsistent state laws.

The ultimate decision in this case will have important implications for the shipping industry. Affirmance by the Third Circuit would confirm that the Shipping Act shields vessel-operating common carriers from court-imposed damages liability for nearly any agreements they reach – prohibited or otherwise. A contrary ruling that exposes vessel-operating common carriers to treble damages liability in federal court would change the landscape and introduce uncertainty where the Shipping Act was thought to provide clarity.

Ocean shipping and other maritime industry participants should monitor this case. As the case continues and further rulings are issued, we will provide updates.

In the meantime, Holland & Knight can help navigate regulatory and antitrust compliance in the context of your particular business and industry sector. Our team is highly experienced in designing, auditing, and developing top-down compliance and dawn-raid solutions for multinational companies.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions