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Carrier Antitrust Immunity Revisited:
The Continent Abolishes it; is Uncle Sam Next?
by Steve W. Block (Betts, Patterson &
Mines, P.S.)
The European
Competitiveness Council (ECC) of the European Union (EU) recently
lowered the hammer on ocean carrier antitrust immunity, a move
portending similar legislation in the U.S. and elsewhere. Effective
October 2008, carriers who call on the ports of EU member states may not
do so pursuant to contracts or tariffs the pricing of which is
orchestrated by collective rate setting. Only routes involving EU ports
are affected; carriers can still collaborate in setting rates for other
routes (including North American) without running afoul of the ECC’s
edict. The intended result: lower freight rates prompted by increased
competition between carriers as a result of market-driven forces, and
enhanced transportation services resulting from carriers vying for
shippers in a stronger bargaining position.
It won’t be an
unfettered free-for-all. The ECC will develop a series of guidelines
governing competition before the new law’s effective date. It will
publish an “issues paper” shortly to get the ball rolling on what
guidelines might be most effective, and inviting input from those
concerned. The transition won’t be easy, and EU officials are doing what
they can to make this more an evolutionary step than shock therapy.
Having studied the
question carefully with EU carrier and shipper groups, the EEC concluded
that smaller carriers – contrary to their own protestations – would not
suffer unfairly. If anything, they should enjoy the advantage of more
fluid entry into smaller niche markets where they can operate most
profitably. Moreover, large and mid-size carriers still may still offer
joint services (i.e., “vessel-sharing, co-ordination of routes and
schedules”) in coordination with smaller outfits.
The ECC points out
that its recent move “is a logical consequence of the fact that
different competition regimes are in force world-wide.” Pointing to the
example that “. . . today US law allows carriers to fix prices jointly
on inland transport, while EU law does not,” the EEC makes clear its
feeling that Uncle Sam should follow suit.
So where are we
stateside on the issue? Abolition of carrier antitrust immunity has been
suggested and promoted since shortly after implementation of the Ocean
Shipping Reform Act (“OSRA”) in May 1999 (see August 2000 Legal Lookout
article entitled “The Uncertain Future of Carrier Antitrust Immunity”).
Given that the U.S. no longer owns any major steamship lines, allowing
carriers Sherman Act immunity essentially protects only foreigners as
they enjoy the privilege of shipping to and from earth’s largest market.
Bills before Congress have stalled in committee, partly on the basis
that worldwide uniformity is desirable.
Our own movement in
the direction of bringing carriers into the more orthodox business world
has been underway for some time now. Congress established an entire
quasi-governmental agency to study a panoply of antitrust issues with
the Antitrust Modernization Commission (“AMC”), founded by federal
statute in 2002 as part of an effort toward overhauling America’s
anti-competition laws. The shipping industry has been a focus of AMC
efforts, and hearings have included representatives of government and
industry over the past couple years.
The EU’s latest
position is sure to be a consideration in upcoming AMC proceedings,
which recognizes the U.S. may be behind the eight ball in worldwide
shipping law trends. While uniformity for years has been a reason to
maintain antitrust immunity, it now appears to be a strong argument
toward nixing it. Submissions from private and public sector
representatives indicate that, at a minimum, carrier antitrust issues
should be revisited regularly.
OSRA actually
limits the extent of carrier antitrust immunity, but does so in the
context of circumstances that have evolved over the past eight years in
a dynamic shipping industry. Carrier, intermediary and shipper groups
naturally differ in their feelings about what’s necessary and
appropriate, but their submitted comments demonstrate a general
consensus that some measure of change is needed, even if just to keep a
closer eye on the industry and its governing law.
Shipping
relationships are long and well-established in the U.S., and shipping
legislation moves notoriously slowly here. Still, it’s difficult to
envision perpetual, U.S.-sponsored carrier antitrust immunity under
these circumstances. Time may be needed to effectively wean our
transportation industry away from carrier collective rate setting, but
principles of worldwide uniformity should be the controlling concern.
Ref: “Competition:
repeal of block exemption for liner shipping conferences – frequently
asked questions,” available at http://www.nitl.org/Memo06344.pdf; and
the Antitrust Modernization Commission’s website [url=http://www.amc.gov.]http://www.amc.gov.
Steve Block is an
attorney concentrating on maritime, transportation, and fisheries law
with the Seattle law firm of Betts, Patterson & Mines, P.S. He can be
reached at sblock@bpmlaw.com or (206) 292-9988.
November 4, 2006
Attorneys’ Fees: When can you get them
back?
by Steve W. Block (Betts, Patterson &
Mines, P.S.)
When disputing
players consider hiring lawyers to fight out their cases in court or
before arbitration panels, they typically ask, “how much in attorneys’
fees and litigation costs is this going to cost me?” When they get the
typically unpleasant news, their second question usually goes something
like this: “If we win, can we get those costs and fees paid back to us
from the bad guys?”
In most U.S.
jurisdictions, the answer to that question usually is “no, at least not
as a matter of law.” Unlike Britain, whose common law legal system sired
our own, the U.S. has never embraced awards of costs and fees to
prevailing litigants, save some modest costs tacked onto the end of
final judgments. Recognition that attorney fees are not recoverable
dissuades (at least theoretically) the filing of low-dollar claims and
allegations of dubious merit. It considers that opinions about the
reasonable value of legal services are wide ranging, and saves courts
the trouble of deciding how much any given case should be worth in terms
of litigation costs.
But there are
circumstances in which legislatures and the judiciary are compelled to
award prevailing parties their costs and fees despite the general rule.
A brief sampling of the class of successful plaintiffs whom the law
often protects includes consumers against crooked merchants; employees
against oppressive employers; victims of frivolous lawsuits; and
innocent players dragged into lawsuits by one third party’s wrongdoing
against another.
American law still
embraces freedom of contract. Business partners, including those whose
relationship is governed by transportation documentation such as bills
of lading and service contracts, may agree in advance that the winner of
any legal dispute will get its costs and fees from the loser. Thus, we
often see attorney-fee clauses in standard shipping contracts. A few
particulars are worth noting here.
To be enforced, the
attorney-fee clause must be clear and precise, demonstrating the
parties’ intent that it’s applicable to the dispute at hand. If a fee
clause is limited to actions to collect freight charges (which often is
the case in carrier form documents), then an aggrieved shipper won’t be
awarded costs for litigating a freight claim. When addressing the
prevailing party’s rights, the term “may” before “be awarded his costs
and attorneys’ fees” empowers a judge to award the winner costs and
fees, but does not obligate him to do so. On the other hand, the word
“shall” before that term mandates a fee award (in most jurisdictions),
leaving only the amount of the award at issue.
Most states and
federal jurisdictions enforce one-sided attorney fee clause bilaterally.
In other words, if the clause says that the carrier shall be entitled to
recover its litigation costs in the event it prevails, courts will award
the shipper or forwarder its costs should the carrier not prevail. The
idea is to keep big business entities from wielding too much power in
the negotiating process.
You typically can’t
recover attorneys’ fees from Uncle Sam, although there are some
exceptions to this.
One of the most
important things to remember is that many judges really don’t like to
award costs and fees even when they’re statutorily or contractually
obligated to do so. Only “reasonable” costs and fees are recoverable,
despite the true amount a lawyer might have collected from his or her
successful client. There are a number of hoops a successful litigant
must jump through before recouping its fees, and judges often reduce fee
claims based on noncompliance with governing rules. Just ask Maersk,
which recently saw a federal court in Hawaii slash its recoverable fees
after the carrier prevailed in a freight charge dispute. The shipping
agreement contained a fee clause, and Maersk asked the court to award
some $100,000 in costs and fees related to the collection action.
The bills Maersk
submitted for court review contained inked-out descriptions of attorney
activity, and failed to assert what portion of daily billing was for
what task. Maersk’s attorneys sometimes billed for two attorneys when
one would be sufficient. Some of the time entries Maersk’s lawyers
billed for were deemed excessive for the task. While the court rejected
some of the shipper’s arguments, it reduced Maersk’s fee award by some
20%.
This instance
demonstrates some of the difficulties of recovering attorneys’ fees. Had
Maersk’s attorneys not redacted the task descriptions in its submitted
invoicing, it might very well have violated the attorney-client
privilege – in form or in substance – by divulging trial strategy or
other secrets Maersk would rather not air. How can a court determine by
reading a billing invoice whether a matter justified the labor of two
attorneys, or how much time an issue’s complexities deserved? The
judge’s sense of what’s “reasonable” controls, and judges vary greatly
on this issue.
Be aware of
attorney-fee clauses, particularly those in form contracts and bills of
lading (including incorporated tariffs), and don’t be afraid to
negotiate them. Consider with counsel the potential impact of fee
clauses in strategizing the defense or prosecution of a claim. Counsel
will rarely agree to limit their costs and fees to what’s awarded, so
it’s a good idea for parties to be aware of what might or might not be
recouped. Learn a judge’s or court’s propensities regarding fee awards
before proceeding. It’s usually a bad idea to litigate solely for the
purposes of recovering attorney fees, but after the smoke has cleared, a
post-proceeding motion to the court is usually worthwhile.
Ref: Maersk, Inc.
v. Hartmann Metals Corporation, 2007 WL 294223 (D. Haw. 2007)
Steve Block is an
attorney concentrating on maritime, transportation, and fisheries law
with the Seattle law firm of Betts, Patterson & Mines, P.S. He can be
reached at sblock@bpmlaw.com or (206) 292-9988.
February 22, 2007
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