Star Lines, Ltd. v. Puerto Rico Maritime Ship. Auth.

• Decision Date: 03 May 1978
• Docket Number: No. 77 Civ. 1968 (RLC).,77 Civ. 1968 (RLC).
• Citation: 451 F. Supp. 157
• Parties: STAR LINES, LTD., Plaintiff, v. PUERTO RICO MARITIME SHIPPING AUTHORITY and Pacific Far East Lines, Inc., Defendants.
• Court: U.S. District Court — Southern District of New York

451 F. Supp. 157

STAR LINES, LTD., Plaintiff, v. PUERTO RICO MARITIME SHIPPING AUTHORITY and Pacific Far East Lines, Inc., Defendants.

No. 77 Civ. 1968 (RLC).

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

May 3, 1978.

Curtis, Mallet-Prevost, Colt & Mosle, New York City, Eliot Lauer, New York City, of counsel, for plaintiff.

Austrian, Lance & Stewart, P. C., New York City, Galland, Kharasch, Calkins & Short, Washington, D. C., Peabody, Rivlin, Lambert & Meyers, Washington, D. C., William Klein II, Sandra Gale Behrle, New York City, Amy Loeserman Klein, William Karas, Lewis A. Rivlin, John T. Schell, Washington, D. C., of counsel, for defendant, Puerto Rico Maritime Shipping Authority.

ROBERT L. CARTER, District Judge.

OPINION

Star Lines, Ltd. ("Star Lines") commenced this action against Puerto Rico Maritime Shipping Authority ("PRMSA") and Pacific Far East Lines ("PFEL"), alleging, insofar as is relevant to the instant motion, that the defendants violated §§ 1 and 2 of the Sherman Act (15 U.S.C. §§ 1, 2).¹ Star Lines seeks to recover treble damages under § 4 of the Clayton Act (15 U.S.C. § 15). PRMSA now moves for summary judgment² on the grounds that (1) plaintiff lacks standing to raise the issue of PRMSA's antitrust violations; and (2) PRMSA's status as a governmental entity acting pursuant to the specific authority granted it by the Puerto Rico Legislature immunizes it from liability under the antitrust laws. For the reasons set out below, defendant's motion is denied.

Facts

The facts underlying the present dispute were set out in an earlier opinion of this court, denying PRMSA's motion to transfer pursuant to 28 U.S.C. §§ 1404, 1406, Star Lines, Ltd. v. Puerto Rico Maritime Shipping Authority, 442 F.Supp. 1201 (S.D.N.Y. 1978), and familiarity is assumed. Accordingly, only those facts which are necessary for purposes of determining the instant motion will be set forth.

"PRMSA is both a public agency and a non-stock profit making corporation created, owned, and controlled by the Commonwealth of Puerto Rico."³ PRMSA's purpose and powers are "`to own and regulate all aspects of commercial freight shipping in and out of the island from the Eastern and Gulf ports of the mainland as a public service.'"⁴ In order to carry out its designated function, "PRMSA acquired control over privately owned marine transportation facilities in Puerto Rico and some twelve cargo ships."⁵ One of these ships, the S.S. Puerto Rico, constitutes an essential element of the dispute underlying this action.

The S.S. Puerto Rico is a modern "roll-on roll-off" vessel in which the cargo is transported by means of trailers which are driven on and off the ship. On May 18, 1976, PRMSA entered into an agency contract with Star Lines with respect to the S.S. Puerto Rico. "Under the terms of the contract, Star Lines was to be the agent of PRMSA for purposes of servicing and booking cargo for the S.S. Puerto Rico on its East Coast-Persian Gulf runs."⁶ The S.S. Puerto Rico was thereafter used exclusively in the East Coast-Persian Gulf service.

The events which led to the present lawsuit were summarized in our earlier opinion:

"Early in 1977, the agency agreement broke down. On January 4, Star Lines apparently tried to assign its right under the agreement to Pacific Far East Lines (`PFEL'), co-defendant in this action, subject to the approval of PRMSA; but PRMSA did not approve. Instead, on February 15, it gave notice of termination of the agreement to Star Lines and, two days later, gave Star Lines a first refusal offer to subcharter the S.S. Puerto Rico. The next day, Star Lines rejected the subcharter offer on the proffered terms, and also expressed its disagreement with PRMSA as to what date the termination would become effective. At about this time, PRMSA chartered the S.S. Puerto Rico to PFEL, purportedly on the same terms it offered to Star Lines on February 17."⁷

Allegations of the Amended Complaint

Star Lines alleges in its amended complaint that PFEL operated the only two roll-on roll-off vessels in the East Coast-Persian Gulf trade other than the S.S. Puerto Rico, and that it was PFEL's "only competitor in the service" of these vessels.⁸ Star Lines alleges further that PRMSA and PFEL combined and conspired to enter into a contract that would have the effect of "eliminating Star Lines as a competitor" in the service of these vessels in the East Coast-Persian Gulf trade.⁹ This alleged anticompetitive conduct by defendant PRMSA included, but was not limited to, PRMSA unlawfully terminating Star Lines as its agent and unlawfully breaching its covenant not to provide service, directly or indirectly, between the East Coast and the Persian Gulf other than through Star Lines for a specified time period.¹⁰ Count 1 alleges that the defendants' conduct constituted a contract, combination and conspiracy in restraint of trade in violation of § 1 of the Sherman Act.¹¹ Count 2 charges that their conduct constituted an attempt to secure a monopoly for PFEL in the roll-on roll-off cargo service between the East Coast and Persian Gulf in violation of § 2 of the Sherman Act.¹²

Standing

Section 4 of the Clayton Act provides that treble damages may be awarded to "any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws." 15 U.S.C § 15. The courts, in interpreting this section, have limited those categories of persons who may avail themselves of this remedy. See, e. g., Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 97 S.Ct. 690, 50 L.Ed.2d 701 (1976); Hawaii v. Standard Oil Co., 405 U.S. 251, 262-63 n. 14, 92 S.Ct. 885, 31 L.Ed.2d 184 (1972); Long Island Lighting Co. v. Standard Oil Co. of Calif., 521 F.2d 1269 (2d Cir. 1975); Sherman, Antitrust Standing: From Loeb to Malamud, 51 N.Y.U.L.Rev. 374 (1976). The prospective plaintiff must have suffered "antitrust injury, which is to say injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants' acts unlawful." Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., supra, 429 U.S. at 489, 97 S.Ct. at 697; see GAF Corp. v. Circle Floors Co., 463 F.2d 752 (2d Cir. 1972). In addition, the plaintiff must show that he is a person "within the `target area' of the alleged antitrust conspiracy, i. e., a person against whom the conspiracy was aimed . . .." Calderone Enterprises Corp. v. United Artists Theatre Circuit, 454 F.2d 1292, 1295 (2d Cir. 1971), cert. denied, 406 U.S. 930, 92 S.Ct. 1776, 32 L.Ed.2d 132 (1972); see Billy Baxter, Inc. v. Coca-Cola Co., 431 F.2d 183 (2d Cir. 1970), cert. denied, 401 U.S. 923, 91 S.Ct. 877, 27 L.Ed.2d 826 (1971).

The standing controversy here focuses upon Star Line's relationship to the East Coast-Persian Gulf, roll-on roll-off, carrier service. Star Lines contends that although PRMSA was the carrier in the trade, it was Star Lines who "operated" the shipping line and who supplied the contacts and expertise which were the critical factors enabling the S.S. Puerto Rico to compete effectively with PFEL's vessels in the trade. Star Lines contends that it suffered antitrust injury by virtue of PRMSA's conduct in that it was temporarily precluded from participating in the trade for lack of a vessel, and that upon obtaining a vessel,¹³ it was unable to vie successfully with PFEL for a portion of the market because of PFEL's overwhelming presence in the East Coast-Persian Gulf trade as a result of its acquisition of the S.S. Puerto Rico. Star Lines argues further that as PFEL's "competitor," it was in the center of the target area at which the challenged conduct was aimed. Thus, it is Star Lines' position that it has clearly met the requirements for standing to sue under the antitrust laws.

PRMSA, on the other hand, argues that Star Lines' self-serving characterization of itself as a "competitor" in the East Coast-Persian Gulf trade is without foundation. It was PRMSA who was the carrier in the East Coast-Persian Gulf trade, and as such it was PRMSA who vied with PFEL — not Star Lines. PRMSA filed the requisite governing tariff with the Federal Maritime Commission for the vessel; PRMSA paid the crew; and PRMSA assumed the risk for any damaged cargo.¹⁴ PRMSA maintains that since Star Lines did not compete in the industry, it could not have suffered antitrust injury to its competitive position; rather, the injury suffered by Star Lines was the simple, commercial injury it incurred because of the termination of its agency contract. PRMSA argues further that Star Lines lacks standing because it is not in the target area of PRMSA's alleged improper conduct. Rather, its status as PRMSA's agent places Star Lines in the same category as the franchisor¹⁵ and the non-participating landlord¹⁶ who have been held to be too remote from the focus of the anticompetitive conduct complained of to avail themselves of the treble damage remedy under 15 U.S.C. § 15.

It is clear from the present record that both PRMSA and Star Lines participated in the East Coast-Persian Gulf trade, and that their relationship was governed by the principal-agency agreement of May 18, 1976. The question presented here is whether Star Lines' participation in the conduct of that trade, coupled with any entrepreneurial stake it had in the venture's success, is of a sufficient magnitude to warrant treating Star Lines itself, or Star Lines and PRMSA jointly, as PFEL's "competitor" for purposes of antitrust standing.¹⁷ If, for example, the captain of the S.S. Puerto Rico were discharged as a result of the conduct here challenged and he claimed that he was competing with PFEL and was injured in his competitive position by virtue of PRMSA's conduct, his claim would obviously be rejected. If, on the other hand, Star Lines had time chartered the vessel outright and operated it in the trade, its standing to challenge the conduct here at issue as PFEL's competitor would be manifest. The present case, quite...