Capital Freight Serv. v. Trailer Marine Transport

• Decision Date: 06 January 1989
• Docket Number: No. 87 Civ. 8107 (PNL).,87 Civ. 8107 (PNL).
• Citation: 704 F. Supp. 1190
• Parties: CAPITAL FREIGHT SERVICES, INC., Plaintiff, v. TRAILER MARINE TRANSPORT CORPORATION, and Puerto Rico Maritime Shipping Authority and Puerto Rico Marine Management, Inc., Defendants.
• Court: U.S. District Court — Southern District of New York

704 F. Supp. 1190

CAPITAL FREIGHT SERVICES, INC., Plaintiff, v. TRAILER MARINE TRANSPORT CORPORATION, and Puerto Rico Maritime Shipping Authority and Puerto Rico Marine Management, Inc., Defendants.

No. 87 Civ. 8107 (PNL).

United States District Court, S.D. New York.

November 10, 1988.

Filed January 6, 1989.

Herzfeld & Rubin, New York City, for plaintiff.

Pavia & Harcourt, New York City (Richard L. Mattiaccio of counsel), McGlinchey, Stafford, Mintz, Cellini & Lang, New Orleans, La. (Dando B. Cellini, J. Forrest Hinton, Alexander M. McIntyre, Jr., of counsel) for defendant Trailer Marine Transport Corp.

Morgan Lewis & Bockius, New York City (James W. Harbison, Jr., New York City, Mario F. Escudero, Michael S. Kelly, Dennis N. Barnes, Michael F. Clayton, Thomas J. Woodford, Washington, D.C., of counsel), for defendants Puerto Maritime Shipping Authority and Puerto Rico Marine Management, Inc.

OPINION AND ORDER

LEVAL, District Judge.

Defendants Trailer Marine Transport Corporation ("TMT"), Puerto Rico Maritime Shipping Authority ("PRMSA"), and Puerto Rico Marine Management, Inc. ("PRMMI") move pursuant to Fed.R.Civ.P. Rule 12(b)(6) to dismiss the amended complaint for failure to state a claim upon which relief can be granted.

BACKGROUND

This is an action under section 1 of the Sherman Act, 15 U.S.C. § 1, and state tort law. The case involves allegations of price fixing, market allocation and other anti-competitive conduct in the ocean freight transportation market between the mainland United States and Puerto Rico.

The plaintiff, Capital Freight Services, Inc., arranges for the carriage of freight by water common carriers but does not itself own and operate the trucks and vessels used in transporting goods between the United States and Puerto Rico. As such, it is a non-vessel-owning common carrier ("NVOCC"). The defendants, TMT and PRMSA, are vessel-owning common carriers ("VOCC") which carry a substantial portion of the containerized freight between Puerto Rico and the United States. TMT is a Delaware corporation. PRMSA is a public corporation and governmental instrumentality of the Commonwealth of Puerto Rico. Defendant PRMMI is alleged to act as agent for PRMSA in connection with the PRMSA's activities as a carrier by water between Puerto Rico and the United States.¹ It is a Delaware corporation with its principal place of business in New Jersey. The amended complaint refers to PRMSA and PRMMI collectively without distinguishing between the acts of the two.

From January 1985 until September 1987, Capital Freight was engaged in the arranging for carriage of containerized freight between the United States and Puerto Rico. During that period, it utilized the services of TMT to carry freight on the water leg of the United States-Puerto Rico route. The complaint alleges that through careful analysis of TMT's publicly-filed tariffs, Capital Freight was able to gain a competitive advantage over other carriers, including PRMSA, and to offer rates which were less than the rates typically charged to shippers by TMT and PRMSA for freight of a given type, weight, and point of origin. By the end of 1986, plaintiff had developed a substantial number of corporate customers including former customers of PRMSA.

Plaintiff alleges that the defendants engaged in a number of illegal acts in connection with the operation of the United States-Puerto Rico route for containerized freight. It alleges that the defendants conspired to restrict price competition between themselves, to maintain tariff rates at artificially high levels, and to refrain from soliciting each other's customers. The defendants allegedly filed substantially identical tariffs, simultaneously increased rates in the tariffs, and regularly met to discuss tariff rates.

Plaintiff further alleges that the defendants took various anticompetitive actions against Capital Freight as a result of Capital Freight's success in winning over former customers of PRMSA who then utilized TMT carriage arranged by plaintiff for the water leg of the Puerto Rico-United States voyage. PRMSA threatened TMT with a price war unless TMT exercised tighter control over the prices that Capital Freight's customers paid for shipments. TMT then took the following actions to disrupt Capital Freight's business: (1) TMT caused auditors from its parent corporation, Crowley Maritime Corporation, to perform an extraordinary audit of Capital Freight's records and to threaten plaintiff with $170,000 in additional charges unless plaintiff became less competitive with the defendants; (2) TMT caused a collection agent to bill plaintiff thousands of dollars for alleged underpayments; (3) at PRMSA's urging, TMT advised plaintiff that it could no longer use TMT to do business with a former customer of PRMSA; (4) TMT delayed delivery of plaintiff's shipments by opening and inspecting them on a discriminatory basis; (5) TMT advised plaintiff's clients that Capital Freight was committing unlawful acts and was in poor financial condition; and (6) TMT arbitrarily cancelled the line of credit it had extended to Capital Freight and demanded cash in advance for future services with the intent to injure plaintiff. As a result of the defendants' actions, Capital Freight alleges it lost all of its business in the Puerto Rican trade which had constituted 90% of its total income and profit.

Upon these facts, Capital Freight asserts: (i) antitrust claims against all defendants under section 1 of the Sherman Act, 15 U.S.C. § 1, and (ii) state law claims against TMT for tortious interference with business relations and slander. Capital Freight seeks damages of at least $7,000,000 multiplied by three on its antitrust claims and at least $10,000,000 on its state law claims.

Defendants move to dismiss on the grounds that the action against them is barred by the state action doctrine, the Local Government Antitrust Act, 15 U.S.C. §§ 34-36, and the filed rate doctrine announced in Keogh v. Chicago & Northwestern Ry Co., 260 U.S. 156, 43 S.Ct. 47, 67 L.Ed. 183 (1922) and reaffirmed in Square D Co. v. Niagara Frontier Tariff Bureau, Inc., 476 U.S. 409, 106 S.Ct. 1922, 90 L.Ed. 2d 413 (1986). TMT argues that in the event the Sherman Act claim is dismissed, the state law claims should be dismissed for lack of jurisdiction.

DISCUSSION

On a motion to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted, the court must accept the allegations of the complaint as true and construe all inferences in plaintiff's favor. Dahlberg v. Becker, 748 F.2d 85, 88 (2d Cir. 1984), cert. denied, 470 U.S. 1084, 105 S.Ct. 1845, 85 L.Ed.2d 144 (1985). An action may be dismissed under Fed.R.Civ.P. Rule 12(b)(6) only when "`it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'" Philips Business Systems, Inc. v. Executive Communications Systems, Inc., 744 F.2d 287, 290 (2d Cir.1984) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957)).

A. The Keogh Doctrine

TMT, PRMSA and PRMMI argue that the filed rate doctrine of Keogh v. Chicago & Northwestern Ry Co., 260 U.S. 156, 43 S.Ct. 47, 67 L.Ed. 183 (1922) and Square D Co. v. Niagara Frontier Tariff Bureau, Inc., 476 U.S. 409, 106 S.Ct. 1922, 90 L.Ed. 2d 413 (1986) requires dismissal. In Keogh, the Supreme Court held that a shipper could not maintain suit under the Sherman Act against its carriers for conspiring to file arbitrary and unreasonable rates with the Interstate Commerce Commission. The Court reasoned that approval of the rates by the ICC established the legal rights between shippers and carriers, id. 260 U.S. at 163, 43 S.Ct. at 49, and that a contrary rule would controvert the nondiscrimination principle underlying the Interstate Commerce Act by effectively allowing a shipper to seek illegal rebates through claims under the antitrust laws. The Court also reasoned that any injury suffered by the shipper would be speculative because of the difficulty proving either that the ICC might have approved lower rates and/or that the cost of the high rates was actually borne by the shipper rather than the ultimate consumer. The Keogh holding was reaffirmed by the Supreme Court in 1986 in Square D Co. v. Niagara Frontier Tariff Bureau, Inc., 106 S.Ct. 1922.

In both Keogh and Square D, the plaintiffs were shippers of cargo who alleged that the defendant carriers engaged in conspiracies to maintain high tariff rates which would injure plaintiffs as shippers. Capital Freight argues that the Keogh doctrine applies only to suits of shippers and not to those of competitor-carriers. Plaintiff argues that it is bringing suit as a competitor, rather than as a customer, of TMT and PRMSA and is therefore not covered by Keogh. I agree with plaintiff's argument.

Although it has not been overruled, the Keogh doctrine has also not been extended beyond its precise holding. The Keogh doctrine has been limited by recent adjudications, and in particular has been restricted to claims by customers, rather than competitors. In Northeastern Telephone Co. v. American Telephone & Telegraph Co., 651 F.2d 76, 83 (2d Cir.1981), cert. denied, 455 U.S. 943, 102 S.Ct. 1438, 71 L.Ed.2d 654 (1982), the Court held that a tariff filing does not immunize a regulated company from antitrust scrutiny where the filed tariff has been disapproved by the regulatory agency. See also Litton Systems, Inc. v. American Telephone & Telegraph Co., 700 F.2d 785, 820 (2d Cir.1983) ("a tariff filing does not immunize a regulated entity from antitrust scrutiny"); City of Groton v. Connecticut Light & Power Co., 662 F.2d 921, 929 (2d Cir.1981) ("Disapproved tariffs provide no immunity when, as here, the regulatory agency expressly refuses to commit itself pending investigation").

More pertinently, in City of Groton v. Connecticut Light & Power Co., 662 F.2d 921 (2d Cir.1...