A & E. Pacific Construction Co. v. Saipan Stevedore Co.

3 N. Mar. I. Commw. 373
CourtDistrict Court, Northern Mariana Islands
DecidedApril 21, 1988
DocketCIVIL ACTION NO. 88-0001
StatusPublished

This text of 3 N. Mar. I. Commw. 373 (A & E. Pacific Construction Co. v. Saipan Stevedore Co.) is published on Counsel Stack Legal Research, covering District Court, Northern Mariana Islands primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
A & E. Pacific Construction Co. v. Saipan Stevedore Co., 3 N. Mar. I. Commw. 373 (nmid 1988).

Opinion

DECISION AND ORDER

Plaintiffs filed a seven-count class action suit againrt defendants Commonwealth Ports Authority (CPA), its directors, and Saipan Stevedoring Company (SSC) alleging th defendant had engaged in predatory pricing, conducted a public utility in an unreasonable manner, breached fiduciary duties to taxpayers, violated plaintiffs' civil rights, and engaged in anti-competitive acts in violation of the Sherman Anti-trust Act. Plaintiffs sought a temporary restraining order to prevent defendants from continuing to impose its increased tariff schedules. Defendants moved to dismiss the action alleging that the Federal Maritime Commission (FMC) has exclusive jurisdiction over all of plaintiffs' claim except for count one which is based on predatory pricing in the trucking industry. The Court agrees with defendants and dismisses plaintiffs' complaint on all counts except count one.

[375]*375FACTS

Charlie Dock, the commercial port of Saipan, is located in Tanapag Harbor. The major portion of the region's commerce both import and export is funneled through this port. In 1975, SSC leased Charlie Dock from the Trust Territory of the Pacific Islands (TTPI) for the purpose of providing stevedoring services in the Commonwealth of the Northern Mariana Islands (Commonwealth), which it has done exclusively since that time. In 1978, SSC leased the property from MPLC, the successor authority of the dock. In 1985, SSC leased Charlie Dock and adjoining areas from Commonwealth Ports Authority (CPA). The lease with CPA provided, among other things, that SSC would have the exclusive right to operate the port. In exchange, SSC agreed tó pay CPA a monthly rental. CPA's attorney forwarded the lease to Wa;hington, D.C., in an effort, to comply with FMC regulations which required the filing of all terminal operator agreements. In 1987, FMC informed CPA that the lease had originally been sent to the wrong address but it had finally arrived in the right office. FMC informed CPA that the lease was effective as of July, 1987.

In December, 1987, SSC circulated a notice to many of its customers informing them that its rates would be raised for various services. A group of local businesses formed an association called "Concerned Port Users" and retained attorney Robert O'Connor to represent their interests in pursuing a moratorium on SSC's rate increases. O'Connor was [376]*376unable to convince SSC to reconsider the rate increase. O'Connor wrote to FMC and requested that the new rates be investigated by FMC. He subsequently filed this suit seeking a legal remedy in this Court.

The suit, filed January 19, 1988, alleges that SSC reduced its trucking rates below cost to .retaliate against plaintiffs Larry Guerrero and George Fleming, who both operate trucking companies, for opposing SSC's new tariffs. Plaintiffs' second cause of action alleges that SSC is a public utility which acted unreasonably, unfairly, and discriminatorily when it unilaterally raised its tariffs in December, 1987. The third cause of action is against CPA for breaching its fiduciary duty to taxpayers by granting an unregulated monopoly to SSC. Under count four, plaintiffs allege that defendants violated plaintiffs' constitutional rights of equal protection and due process in contravention of the Fourteenth Amendment and 42 U.S.C. §1983. Plaintiffs' fifth cause of action asserts that the exclusive lease agreement between SSC and CPA is a violation of the Sherman Anti-trust Act. The sixth cause of action alleges that the monopoly lease agreement also violates Commonwealth anti-trust law. Finally, plaintiffs' seventh cause of action seeks damages for losses suffered as consumers.

On February 11, 1988, plaintiffs moved for a preliminary injunction and declaratory judgment. The motion sought to prevent SSC from imposing or collecting additional rates under the new tariff. On February 17, 1988, defendants [377]*377moved to dismiss the complaint except as to the first count] involving predatory pricing in the trucking industry. Defendants alleged that FMC had exclusive authority to consider ' the’ propriety of lease agreements and consequent tariff schedules of terminal operators.

ANALYSIS

I. Predatory Pricing in SSC's Trucking Business.

The motion to dismiss the complaint is directed only at counts two through seven. The first count, based on predatory pricing in SSC's trucking business is not subject to the jurisdiction of FMC and will remain in this Court.

II. The Lease Agreement Between SSC and CPA.

In 1916, the United States Congress enacted the Shipping Act. The Act set up a comprehensive regulatory scheme which, inter alia, granted limited anti-trust immunity to ocean shipping lines. The United States Shipping Board was established under the Act to regulate the ocean shipping industry. Judicial interpretations following enactment of the Act, however, limited the anti-trust immunity and narrowed its scope. Seawinds Ltd. v. Nedlloyd Lines, B.V., 80 B.R. 181, 184 (N.D.Cal. 1987). Further, the injecting of the judicial branch into maritime regulation created parallel jurisdiction in the courts and the United States Shipping Board. Id. The disposition of shipping claims in separate forums necessarily resulted in uncertainty in the [378]*378regulatory scheme.

As a consequence, Congress re-wrote the Act and enacted it as the Shipping Act of 1984 (Act). The new Act made several changes. Among them, the Act limited actions for relief from conduct proscribed by the statute to the Federal Maritime Commission (FMC), the successor to the United States Shipping Board. The Act also extended anti-trust immunity beyond the shipping lines themselves. More importantly, for purposes of this case, the Act abolished private' rights of action for anti-trust violations based on agreements which fell within the jurisdiction of the Act. Seawinds, 80 B.R. at 184, The Act vested exclusive jurisdiction for these violations in FMC. Title 46 U.S.C. §1702 (27) provides that the Act applies to the Northern Mariana Islands.

The Act exempts agreements filed with FMC from the penumbra of federal anti-trust laws. 46 U.S.C. 1706(a), To be protected, however, the agreement must be filed and effective. Id. Plaintiffs allege that the agreement they seek to set aside between CPA and SSC was not filed with FMC and was not effective. The record contains several correspondences from FMC indicating that although the SSC lease agreement was originally mailed to a non-entity the FMC had obtained a copy of it and had determined that it was effective July 18, 1987. Plaintiffs raise several reasons why FMC was wrong, why the filing was never effective, and why, even if it was, the anti-trust immunity did not apply for the period from 1985 through 1987. In Greater Baton Rouge [379]*379Port Commission v. United States, 287 F.2d 86 (5th Cir. 1961), cert. denied, 368 U.S. 985 (1962), this same argument was raised. There, the parties failed to follow the Act's requirements regarding exclusive leases.

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3 N. Mar. I. Commw. 373, Counsel Stack Legal Research, https://law.counselstack.com/opinion/a-e-pacific-construction-co-v-saipan-stevedore-co-nmid-1988.