January 23, 2017

Third Circuit Affirms Private Damages Immunity Under Shipping Act for Ocean Common Carriers

Holland & Knight Alert
David C. Kully


  • The U.S. Court of Appeals for the Third Circuit has issued an opinion affirming that ocean common carriers are immune from damages claims brought under federal or state antitrust laws.
  • The Third Circuit's decision, issued on Jan. 18, 2017, reaffirms for the shipping industry the certainty and clarity that Congress intended to provide when it enacted the Shipping Act in 1984.
  • Antitrust plaintiffs can still pursue their claims before the Federal Maritime Commission (FMC).

Holland & Knight alerted the maritime community in November 2016 that the U.S. Court of Appeals for the Third Circuit appeared likely to affirm the dismissal of private antitrust claims brought against roll-on, roll-off carriers for allegedly agreeing to fix prices and reduce capacity. (See Holland & Knight alert, "Third Circuit Considering Federal Court Damages Immunity for Ocean Shipping Companies," Nov. 28, 2016.) This month, the Third Circuit proceeded as anticipated, issuing an opinion affirming that the carrier defendants were immune from damages claims brought under federal or state antitrust laws. See In re Vehicle Carrier Servs. Antirust Litig., Nos 15-3353, 15-3354, 15-3355 (3d Cir. Jan. 18, 2017). The Third Circuit's decision reaffirms for the shipping industry the certainty and clarity that Congress intended to provide when it enacted the Shipping Act in 1984.

The private antitrust claims against the ocean common carriers followed criminal antitrust prosecutions brought by the U.S. Department of Justice. The U.S. District Court for the District of New Jersey found the defendants immune under the Shipping Act from private damages liability and dismissed the claims. See In re Vehicle Carrier Servs. Antitrust Litig., MDL No. 2471 (D.N.J. Aug. 28, 2015). During oral argument on Nov. 17, 2016, the Third Circuit judges expressed significant skepticism of the plaintiffs' arguments that Shipping Act immunity did not apply to their claims, and it ultimately affirmed the district court's decision.

Third Circuit's Opinion

The Third Circuit observed that Congress in the Shipping Act established antitrust immunity for certain carrier activities in an effort "to place U.S.-flag vessels on a level economic playing field with their foreign counterparts." Slip Op. at 16-18. Under the Shipping Act, ocean common carriers that establish agreements with competitors receive limited antitrust immunity – from both criminal prosecution and private damages liability – for activities covered by a properly filed Federal Maritime Commission (FMC) agreement. Slip Op. at 19-20. Because the defendants did not file their alleged unlawful agreement to fix prices and reduce capacity with the FMC, their agreement never became "effective," and the Shipping Act thus did not immunize them from criminal liability. But, the Third Circuit found, the Shipping Act still protected them from facing a private antitrust case and potential treble-damages liability in federal court. Slip Op. at 21-25. The Third Circuit also affirmed the district court's finding that, although the Shipping Act refers only to private damages actions brought under federal antitrust laws, the Shipping Act pre-empts state antitrust laws and protects defendants from damages liability under those state statutes. Slip Op. at 30.

Finally, the Third Circuit noted that its decision did not leave the plaintiffs without recourse; antitrust plaintiffs can pursue their claims before the FMC. Slip Op. at 21-22.

Considerations for Shipping Companies

Holland & Knight will continue to monitor this and other cases of interest to the shipping industry and provide further alerts as new issues arise. 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.

For more information or further explanation of the issues covered, contact a member of our Maritime Antitrust Team: Michael Cavanaugh, David Kully or Eric Lee (@MaritimeEric).


Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.

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