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In re Vehicle Carrier Services Antitrust Litigation

United States Court of Appeals, Third Circuit

January 18, 2017

IN RE: VEHICLE CARRIER SERVICES ANTITRUST LITIGATION Direct Purchaser Plaintiffs Cargo Agents, Inc.; International Transport Management Corp.; and Manaco International Forwarders, Inc.; Appellants Martens Cars of Washington, Inc.; Hudson Charleston Acquisition, LLC d/b/a Hudson Nissan; John O'Neil Johnson Toyota, LLC; Hudson Gastonia Acquisition, LLC; HC Acquisition, LLC d/b/a Toyota of Bristol; Desert European Motorcars, Ltd; Hodges Imported Cars, Inc. d/b/a Hodges Subaru; Scotland Car Yard Enterprises d/b/a San Rafael Mitsubishi; Hartley Buick/GMC Truck, Inc. d/b/a Hartley Honda; Panama City Automotive Group, Inc. d/b/a John Lee Nissan; Empire Nissan of Santa Rosa, LLC, Appellants End Payor Plaintiffs; Truck and Equipment Dealer Plaintiffs, Appellants

          Argued: November 17, 2016

         ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY (No. 2:13-cv-03306, MDL No. 2471) District Judge: Hon. Esther Salas

          Kit Pierson Christopher J. Cormier David A. Young Cohen Milstein Sellers & Toll PLLC, Robert N. Kaplan Richard J. Kilsheimer [ARGUED] Gregory K. Arenson Joshua H. Saltzman Kaplan Fox & Kilsheimer LLP, Steven A. Kanner, Michael J. Freed Michael E. Moskovitz Freed Kanner London & Millen LLC, Lewis H. Goldfarb McElroy, Deutsch, Mulvaney & Carpenter, LLP, Solomon B. Cera C. Andrew Dirksen Cera LLP, Joseph C. Kohn Douglas A. Abrahams William E. Hoese Kohn Swift & Graf, P.C., Lee Albert Gregory B. Linkh Glancy Prongay & Murray LLP, Gregory P. Hansel Randall B. Weill, Michael Kaplan Jonathan G. Mermin Michael S. Smith Preti, Flaherty, Beliveau & Pachios LLP, Eugene A. Spector Jeffrey J. Corrigan Jay S. Cohen Rachel E. Kopp Spector Roseman Kodroff & Willis, P.C., W. Joseph Bruckner Heidi M. Silton Lockridge Grindal Nausen P.L.L.P., Vincent J. Esades Heins Mills & Olson, P.L.C., Joseph J. DePalma Katrina Carroll Steven J. Greenfogel Lite DePalma Greenberg, LLC, Edward D. Greenberg David K. Monroe GKG Law, P.C., Benjamin Bianco Gregory A. Frank Frank LLP, Counsel for Appellants Cargo Agents, Inc., International Transport Management Corp., and Manaco International Forwarders, Inc.

          Peter S. Pearlman Cohn Lifland Pearlman Herrmann & Knopf LLP, Jonathon W. Cuneo Joel Davidow Katherine Van Dyck Daniel Cohen Cuneo Gilbert & LaDuca, LLP, Benjamin David Elga, Cuneo Gilbert & LaDuca, LLP, Don Barrett David McMullan Brian Herrington Barrett Law Group, P.A., Shawn M. Raiter Paul A. Sand Larson King, LLP, Dewitt Lovelace Valerie Nettles Lovelace & Associates, P.A., Gerard V. Mantese David Hansma Brendan Frey Mantese Honigman Rossman & Williamson, P.C., Ben F. Pierce Gore Pratt & Associates Charles Barrett Charles Barrett, P.C. Thomas P. Thrash Thrash Law Firm, P.A. Armand Derfner Derfner, Altman, & Wilborn Counsel for Appellants Martens Cars of Washington, Inc, Hudson Charleston Acquisition, LLC, d/b/a Hudson Nissan, John O'Neill Johnson Toyota, LLC, Hudson Gastonia Acquisition, LLC, HC Acquisition, LLC, d/b/a Toyota of Bristol, Desert European Motorcard, Ltd, Hodges Imported Cars, Inc., d/b/a Hodges Subaru, Scotland Car Yard Enterprises d/b/a San Rafael Mitsubishi, Hartley Buick/GMC Truck, Inc., d/b/a Hartley Honda, Panama City Automotive Group, Inc, d/b/a John Lee Nissan and Empire Nissan of Santa Rosa.

          Warren T. Burns [ARGUED] Daniel H. Charest Will Thompson E. Lawrence Vincent Burns Charest LLP, Hollis Salzman Bernard Persky Meegan Hollywood Robins Kaplan LLP, Joseph W. Cotchett Steven N. Williams Cotchett, Pitre & McCarthy, LLP, James E. Cecchi Carella, Byrne, Cecchi, Olstein, Brody & Agnello, P.C. Counsel for Appellant End Payor Plaintiffs.

          Eric R. Breslin Duane Morris LLP, Wayne A. Mack J. Manly Parks Andrew Sperl Duane Morris LLP Counsel for Appellant Truck and Equipment Dealer Plaintiffs.

          John R. Fornaciari Robert M. Disch Baker & Hostetler LLP Counsel for Appellees Nippon Yusen Kabushiki Kaisha and NYK Line North America Inc.

          James L. Cooper Anne P. Davis Adam M. Pergament Arnold & Porter LLP, Robert B. Yoshitomi Eric C. Jeffrey Nixon Peabody LLP, Counsel for Mitsui O.S.K. Lines, Ltd., Mitsui O.S.K. Bulk Shipping (U.S.A.), LLC, World Logistics Service (U.S.A.) Inc., and Nissan Motor Car Carrier Co., Ltd.

          Mark W. Nelson [ARGUED] Jeremy Calsyn Cleary Gottlieb Steen & Hamilton LLP Counsel for Appellees Kawasaki Kisen Kaisha, Ltd. and “K” Line America, Inc.

          Roberto A. Rivera-Soto [ARGUED] Jason A. Leckerman Ballard Spahr LLP Benjamin F. Holt Hogan Lovells U.S. LLP Counsel for Appellees Wallenius Wilhelmsen Logistics AS, Wallenius Wilhelmsen Logistics America LLC, and EUKOR Car Carriers, Inc.

          Steven F. Cherry Brian C. Smith Wilmer, Cutler, Pickering, Hale & Dorr LLP, Counsel for Appellees Compañía Sud Americana de Vapores, S.A. and CSAV Agency, LLC.

          Jeffrey F. Lawrence Wayne Rohde Cozen O'Connor PC Melissa H. Maxman Cohen & Gresser LLP Counsel for Höegh Autoliners AS and Höegh Autoliners, Inc.

          Renata B. Hesse James J. Fredericks Sean Sandolski United States Department of Justice Counsel for Amicus Curiae United States of America.

          Tyler J. Wood William H. Shakely Joel F. Graham Federal Maritime Commission Counsel for Amicus Curiae Federal Maritime Commission.

          Before: AMBRO, SHWARTZ, FUENTES, Circuit Judges.

          OPINION

          SHWARTZ, CIRCUIT JUDGE.

         Ocean common carriers transport cargo between foreign countries and the United States. In this case, Plaintiffs[1] used the services of such carriers to transport vehicles. Some plaintiffs made arrangements with and received vehicles directly from the carriers (direct purchaser plaintiffs or "DPPs"), while other plaintiffs obtained the benefit of the carrier services by ultimately receiving vehicles transported from abroad (indirect purchaser plaintiffs or "IPPs"). Plaintiffs allege that Defendants, who are ocean common carriers, entered into agreements to fix prices and reduce capacity in violation of federal antitrust laws and various state laws. Because the ocean common carriers allegedly engaged in acts prohibited by the Shipping Act of 1984, 46 U.S.C. § 40101 et seq. (the "Shipping Act" or the "Act"), and the Act both precludes private plaintiffs from seeking relief under the federal antitrust laws for such conduct and preempts the state law claims under circumstances like those presented here, the District Court correctly dismissed the complaints. We will therefore affirm.

         I[2]

         Defendants transport vehicles from their country of origin to the country where they will be sold, including the United States, at which point the vehicles are delivered to dealers and individuals, such as Auto Dealer IPPs, Truck Center IPPs, and End-Payor IPPs. The vehicle manufacturers and DPPs purchase vehicle carrier services from Defendants, and the costs of these services are passed on to IPPs.

         In September 2012, law enforcement raided Defendants' offices in connection with antitrust investigations, and several Defendants thereafter pleaded guilty to antitrust violations based on price-fixing, allocating customers, and rigging bids for vehicle carrier services to and from the United States and elsewhere.

         Plaintiffs filed complaints with jury demands alleging that Defendants entered into "secret" agreements in connection with Defendants' carriage of vehicles. These agreements included: (1) price increase coordination agreements; (2) agreements not to compete, including coordination of responses to price reduction requests and allocation of customers and routes; and (3) agreements to restrict capacity by means of agreed-upon fleet reductions. Plaintiffs claim they suffered economic injuries as a result of these agreements and seek relief under the Clayton Act for violations of the Sherman Act. IPPs also assert state antitrust, consumer fraud, and unjust enrichment claims.

         Defendants moved to dismiss the complaints pursuant to Fed.R.Civ.P. 12(b)(6), claiming they are immune from antitrust liability under the Shipping Act and that the state law claims are preempted. The District Court agreed and dismissed the complaints with prejudice.

         While the motions to dismiss were pending, IPPs informed the District Court that they reached a putative class action settlement in principle with two groups of defendants, "K" Line and MOL Defendants (the "Settling Defendants"), but no motions to approve any settlement were filed. After the Court dismissed the complaints, IPPs filed a motion for reconsideration under Fed.R.Civ.P. 59(e) and 60(b) and Local Civil Rule 7.1(i) alleging that, before the cases were dismissed, they had notified the Court that they agreed in principle to settle and requested that it retain jurisdiction to approve a class settlement.

         The District Court denied IPPs' motion for reconsideration because it had determined that the Federal Maritime Commission ("FMC") was the appropriate forum to hear the dispute[3] and because IPPs "did not identif[y] an intervening change in the controlling law, alert[ ] the Court to the availability of new evidence that was not available when the Court issued its Opinion, or allege[ ] that the Opinion was the result of a clear error of fact or law or will result in manifest injustice." Joint App. 62-63.

         Plaintiffs appeal the order dismissing the complaints and IPPs also appeal the order denying reconsideration.[4]

         II

         To resolve this appeal, we must first examine the Shipping Act of 1984. Broadly, the Shipping Act establishes a uniform federal framework for regulating entities, such as ocean common carriers, [5] and attempts to place U.S.-flag vessels on a level economic playing field with their foreign counterparts. The Act sets forth four specific purposes:

(1) 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;
(2) 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;
(3) encourage the development of an economically sound and efficient liner fleet of vessels of the United States capable of meeting national security needs; and
(4) promote the growth and development of United States exports through competitive and efficient ocean transportation and by placing a greater ...

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