Maritime, +3
Maritime
MAN Ferrostaal v. M/V Akili: Steel Pipe Cargo Damage and Improper Stowage
MAN Ferrostaal v. M/V Akili examines steel pipe cargo damage, improper stowage, dunnage failures, marine survey evidence, and vessel liability.
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Maritime
8 min read
Areas of Expertise :
Maritime, Antitrust, Economics, Freight, Accounting
Published Date:
Last Modified Date:
Jurisdiction:
Federal. First Circuit
In re Puerto Rican Cabotage Antitrust Litigation (MDL No. 3:08-md-1960 (DRD)) involved consolidated direct-purchaser actions in the U.S. District Court for the District of Puerto Rico. The plaintiffs alleged that, from May 1, 2002, through April 17, 2008, major ocean carriers coordinated customer allocation, rigged bids, and fixed rates, surcharges, and other fees for waterborne cabotage between the U.S. mainland and Puerto Rico. The consolidated complaint named Horizon Lines entities, Sea Star Line, Crowley Maritime and Crowley Liner Services, Trailer Bridge, and several executives. It asserted claims under Sections 1 and 3 of the Sherman Act, with the proceedings maintained under docket number 08-md-1960 (DRD). Horizon later moved to dismiss the complaint on the MDL docket, relying on Twombly and arguing that the pleading did not allege enough facts to support a plausible inference of an agreement among the defendants.
The litigation later produced settlements with Horizon, Crowley, Sea Star, and Alexander Chisholm. Horizon agreed to establish a $20 million cash settlement fund and allow eligible class members to choose a two-year base-rate freeze instead of receiving a cash distribution. The freeze option was initially valued at $42.9 million, and Horizon also agreed to cooperate with the plaintiffs. Crowley agreed to pay $13.75 million in cash and provide a base-rate freeze valued at $38.9 million. Sea Star agreed to pay $18.5 million in cash and provide a base-rate freeze valued at $23.2 million. In its amended opinion dated September 13, 2011, the court found that the settlements had been negotiated at arm’s length and granted final approval after class notice, a fairness hearing, and additional briefing concerning attorneys’ fees.
The plaintiffs alleged that ocean carriers coordinated customer allocation, rigged bids, and fixed rates and surcharges for cabotage services between the U.S. mainland and Puerto Rico. According to the MDL court’s summary, the proposed class consisted of direct purchasers of those shipping services, while the defendants collectively controlled approximately 86% of the market. These allegations formed the basis of the antitrust claims later addressed through settlement.
The First Consolidated Amended Class Action Complaint set out the alleged coordination and named Horizon, Sea Star, Crowley, Trailer Bridge, and several individual executives as defendants. The complaint asserted violations of Sections 1 and 3 of the Sherman Act, described the challenged rate and surcharge practices, and presented the direct-purchaser theory of injury.
Horizon moved to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6). It argued that the pleading did not allege facts supporting an agreement and that the claimed parallel conduct could have resulted from independent business decisions. Relying on Twombly, Horizon challenged whether the allegations supported a plausible inference of conspiracy.
The court granted preliminary approval to the proposed settlements with Horizon, Crowley, Sea Star, and Alexander Chisholm. It found that the agreements resulted from arm’s-length negotiations and were supported by sufficient discovery. The order advanced the proceedings into the class notice and settlement-approval process.
Following the final fairness hearing, the court entered an order addressing the proposed settlements and the pending request for attorneys’ fees. Although the court concluded that its earlier concerns about the settlement terms had been resolved, it deferred final approval while considering the appropriate method for calculating fees. The parties were directed to submit supplemental briefing on whether the percentage-of-the-fund method should apply to the settlement relief.
Objectors to the initial fee request withdrew their opposition and requested a portion of the fee reduction they maintained had resulted from their efforts. With those objections narrowed, the court continued its review of the proper methodology for determining the fee award.
The court issued an amended opinion granting final approval to the settlements with Horizon, Crowley, Sea Star, and Alexander Chisholm. It confirmed an actual settlement value of $65.85 million, consisting of $52.25 million in cash settlement funds and $13.6 million attributed to base-rate-freeze options selected by eligible class members instead of cash distributions. In reviewing attorneys’ fees, the court applied the percentage-of-the-fund method and performed a lodestar cross-check. The amended opinion resolved the settlement-approval and related fee issues before the court.
Court:
United States District Court for the District of Puerto Rico
Case Name:
In re Puerto Rican Cabotage Antitrust Litigation
Price Fixing
Ocean Shipping
Freight Forwarding
Financial Analysis
Microeconomics
Damages Calculations
Marine Transportation
Bid Rigging
In re Puerto Rican Cabotage Antitrust Litigation (MDL No. 3:08-md-1960 (DRD)) involved consolidated direct-purchaser actions in the U.S. District Court for the District of Puerto Rico. The plaintiffs alleged that, from May 1, 2002, through April 17, 2008, major ocean carriers coordinated customer allocation, rigged bids, and fixed rates, surcharges, and other fees for waterborne cabotage between the U.S. mainland and Puerto Rico. The consolidated complaint named Horizon Lines entities, Sea Star Line, Crowley Maritime and Crowley Liner Services, Trailer Bridge, and several executives. It asserted claims under Sections 1 and 3 of the Sherman Act, with the proceedings maintained under docket number 08-md-1960 (DRD). Horizon later moved to dismiss the complaint on the MDL docket, relying on Twombly and arguing that the pleading did not allege enough facts to support a plausible inference of an agreement among the defendants.
The litigation later produced settlements with Horizon, Crowley, Sea Star, and Alexander Chisholm. Horizon agreed to establish a $20 million cash settlement fund and allow eligible class members to choose a two-year base-rate freeze instead of receiving a cash distribution. The freeze option was initially valued at $42.9 million, and Horizon also agreed to cooperate with the plaintiffs. Crowley agreed to pay $13.75 million in cash and provide a base-rate freeze valued at $38.9 million. Sea Star agreed to pay $18.5 million in cash and provide a base-rate freeze valued at $23.2 million. In its amended opinion dated September 13, 2011, the court found that the settlements had been negotiated at arm’s length and granted final approval after class notice, a fairness hearing, and additional briefing concerning attorneys’ fees.
The plaintiffs alleged that ocean carriers coordinated customer allocation, rigged bids, and fixed rates and surcharges for cabotage services between the U.S. mainland and Puerto Rico. According to the MDL court’s summary, the proposed class consisted of direct purchasers of those shipping services, while the defendants collectively controlled approximately 86% of the market. These allegations formed the basis of the antitrust claims later addressed through settlement.
The First Consolidated Amended Class Action Complaint set out the alleged coordination and named Horizon, Sea Star, Crowley, Trailer Bridge, and several individual executives as defendants. The complaint asserted violations of Sections 1 and 3 of the Sherman Act, described the challenged rate and surcharge practices, and presented the direct-purchaser theory of injury.
Horizon moved to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6). It argued that the pleading did not allege facts supporting an agreement and that the claimed parallel conduct could have resulted from independent business decisions. Relying on Twombly, Horizon challenged whether the allegations supported a plausible inference of conspiracy.
The court granted preliminary approval to the proposed settlements with Horizon, Crowley, Sea Star, and Alexander Chisholm. It found that the agreements resulted from arm’s-length negotiations and were supported by sufficient discovery. The order advanced the proceedings into the class notice and settlement-approval process.
Following the final fairness hearing, the court entered an order addressing the proposed settlements and the pending request for attorneys’ fees. Although the court concluded that its earlier concerns about the settlement terms had been resolved, it deferred final approval while considering the appropriate method for calculating fees. The parties were directed to submit supplemental briefing on whether the percentage-of-the-fund method should apply to the settlement relief.
Objectors to the initial fee request withdrew their opposition and requested a portion of the fee reduction they maintained had resulted from their efforts. With those objections narrowed, the court continued its review of the proper methodology for determining the fee award.
The court issued an amended opinion granting final approval to the settlements with Horizon, Crowley, Sea Star, and Alexander Chisholm. It confirmed an actual settlement value of $65.85 million, consisting of $52.25 million in cash settlement funds and $13.6 million attributed to base-rate-freeze options selected by eligible class members instead of cash distributions. In reviewing attorneys’ fees, the court applied the percentage-of-the-fund method and performed a lodestar cross-check. The amended opinion resolved the settlement-approval and related fee issues before the court.
Financial Expert Witness
A financial expert may assess the economic structure of a proposed antitrust settlement, including the relationship between cash payments and non-cash relief. In a cabotage freight case, the analysis may include estimating the value of rate-freeze options, comparing projected and actual class participation, and reviewing how different forms of recovery contribute to the settlement fund. The expert may also provide calculations used in connection with common-fund fee analysis.
Antitrust Expert Witness
An antitrust economics expert may examine market concentration, barriers to entry, pricing patterns, and the availability of substitute shipping services. The expert may also evaluate whether the alleged conduct could have affected direct purchasers on a class-wide basis and whether common economic evidence can be used to estimate impact. A defense expert may test the assumptions, datasets, and methods used in that analysis or offer an alternative explanation for the observed pricing activity.
Freight Expert Witness
A freight expert may explain how mainland-to-Puerto Rico cabotage operates, including carrier services, customer contracting, bid procedures, rate components, and common surcharges. The expert may compare the challenged practices with ordinary shipping operations and address how carrier capacity, routes, fuel costs, and port conditions can affect freight prices. This testimony can also assist in explaining how a temporary base-rate freeze would operate for participating customers.
Accounting Expert Witness
An accounting or damages expert may review invoices, contracts, rate schedules, payment records, and surcharge data to estimate alleged overcharges. The expert may organize transaction-level information, identify the amounts paid by direct purchasers, and develop calculations for class-wide damages or settlement allocation. In a settlement setting, the analysis may also address distribution formulas and the treatment of different categories of customer purchases.
Use Economic Analysis to Support Class-Wide Impact
Economic evidence can address market concentration, barriers to entry, pricing patterns, and injury across the proposed class. The analysis should connect industry structure to measurable effects on direct purchasers. Counsel should also confirm that the models, assumptions, and underlying datasets support common proof rather than purchaser-specific conclusions.
Combine Cash Relief with Measurable Non-Cash Benefits
A settlement may pair cash payments with base-rate freezes or similar pricing protections. Any non-cash component should be supported by a clear valuation method, participation data, and a practical explanation of how class members may receive the benefit. This allows the court to assess the relief as part of the total settlement value rather than treat it as an uncertain or nominal component.
Prepare Fee Requests for Review of Cash and Elected Rate-Freezes
After the fairness hearing, the court requested additional briefing on the appropriate method for calculating attorneys’ fees. The fee analysis therefore had to address both the cash settlement funds and the actual value of base-rate-freeze options selected by eligible class members. In its September 13, 2011 amended opinion, the court applied the percentage-of-the-fund method and used a lodestar cross-check when reviewing the requested fees.
Plead Facts That Go Beyond Parallel Pricing
Under Twombly, allegations of similar pricing conduct are not enough by themselves to support a conspiracy claim. A complaint should connect parallel conduct with additional facts, such as communications, bidding practices, market concentration, customer allocation, or conduct that would be difficult to explain through independent decision-making. Early dismissal motions often test whether those allegations support a plausible inference of agreement.
Coordinate Separate Settlement Agreements Through a Unified Approval Process
The agreements with Horizon, Crowley, Sea Star, and Alexander Chisholm involved separate settlement terms but proceeded through a coordinated approval process. The court reviewed the negotiations, available discovery, class notice, fairness hearing, settlement values, and fee issues before granting final approval. In a multi-defendant MDL, counsel should present consistent class definitions, allocation procedures, notice materials, and explanations of how the separate agreements operate together.
The Puerto Rican Cabotage Antitrust Litigation (MDL No. 3:08-md-1960 (DRD)) arose from direct-purchaser allegations that major ocean carriers coordinated customer allocation, rigged bids, and fixed rates, surcharges, and other fees for freight transported between the U.S. mainland and Puerto Rico from May 1, 2002, through April 17, 2008. After the consolidated complaint was filed in 2008, the proceedings included dismissal motions, settlement negotiations, class notice, a fairness hearing, and additional review of attorneys’ fees. On September 13, 2011, the court granted final approval to the settlements with Horizon, Crowley, Sea Star, and individual defendant Alexander Chisholm, confirming an actual combined settlement value of $65.85 million. The amended opinion resolved the approval, valuation, and attorneys’ fee issues associated with those settlements, which combined cash recovery with optional base-rate freezes tied to future shipping charges.
What conduct did the direct purchasers allege?
The plaintiffs alleged that major ocean carriers fixed rates and surcharges, rigged bids, and allocated customers for shipping services between the U.S. mainland and Puerto Rico. The actions were consolidated in MDL No. 3:08-md-1960 in the U.S. District Court for the District of Puerto Rico.
Which carriers and individuals were named in the consolidated complaint?
The complaint named Horizon Lines entities, Sea Star Line, Crowley Maritime and Crowley Liner Services, Trailer Bridge, and several executives. The settlements discussed in the September 13, 2011 amended opinion involved Horizon, Crowley, Sea Star, and Alexander Chisholm.
When did the alleged price-fixing and bid-rigging occur?
The complaint covered alleged conduct from May 1, 2002, through April 17, 2008. That period defined the scope of the direct-purchaser class claims addressed in the MDL.
What was the actual value of the approved settlements?
The court confirmed a combined settlement value of $65.85 million. That amount consisted of $52.25 million in cash settlement funds and $13.6 million attributed to base-rate-freeze options selected by eligible class members.
How did the court evaluate the base-rate-freeze options?
The court considered the nature and actual value of the base-rate-freeze options when determining the settlement value used for attorneys’ fee review. Rather than relying on the initial projected value, it attributed $13.6 million to the options selected by eligible class members and then applied the percentage-of-the-fund method with a lodestar cross-check.
What did the September 13, 2011 amended opinion decide?
Financial Expert Witness
A financial expert may assess the economic structure of a proposed antitrust settlement, including the relationship between cash payments and non-cash relief. In a cabotage freight case, the analysis may include estimating the value of rate-freeze options, comparing projected and actual class participation, and reviewing how different forms of recovery contribute to the settlement fund. The expert may also provide calculations used in connection with common-fund fee analysis.
Antitrust Expert Witness
An antitrust economics expert may examine market concentration, barriers to entry, pricing patterns, and the availability of substitute shipping services. The expert may also evaluate whether the alleged conduct could have affected direct purchasers on a class-wide basis and whether common economic evidence can be used to estimate impact. A defense expert may test the assumptions, datasets, and methods used in that analysis or offer an alternative explanation for the observed pricing activity.
Freight Expert Witness
A freight expert may explain how mainland-to-Puerto Rico cabotage operates, including carrier services, customer contracting, bid procedures, rate components, and common surcharges. The expert may compare the challenged practices with ordinary shipping operations and address how carrier capacity, routes, fuel costs, and port conditions can affect freight prices. This testimony can also assist in explaining how a temporary base-rate freeze would operate for participating customers.
Accounting Expert Witness
An accounting or damages expert may review invoices, contracts, rate schedules, payment records, and surcharge data to estimate alleged overcharges. The expert may organize transaction-level information, identify the amounts paid by direct purchasers, and develop calculations for class-wide damages or settlement allocation. In a settlement setting, the analysis may also address distribution formulas and the treatment of different categories of customer purchases.
Use Economic Analysis to Support Class-Wide Impact
Economic evidence can address market concentration, barriers to entry, pricing patterns, and injury across the proposed class. The analysis should connect industry structure to measurable effects on direct purchasers. Counsel should also confirm that the models, assumptions, and underlying datasets support common proof rather than purchaser-specific conclusions.
Combine Cash Relief with Measurable Non-Cash Benefits
A settlement may pair cash payments with base-rate freezes or similar pricing protections. Any non-cash component should be supported by a clear valuation method, participation data, and a practical explanation of how class members may receive the benefit. This allows the court to assess the relief as part of the total settlement value rather than treat it as an uncertain or nominal component.
Prepare Fee Requests for Review of Cash and Elected Rate-Freezes
After the fairness hearing, the court requested additional briefing on the appropriate method for calculating attorneys’ fees. The fee analysis therefore had to address both the cash settlement funds and the actual value of base-rate-freeze options selected by eligible class members. In its September 13, 2011 amended opinion, the court applied the percentage-of-the-fund method and used a lodestar cross-check when reviewing the requested fees.
Plead Facts That Go Beyond Parallel Pricing
Under Twombly, allegations of similar pricing conduct are not enough by themselves to support a conspiracy claim. A complaint should connect parallel conduct with additional facts, such as communications, bidding practices, market concentration, customer allocation, or conduct that would be difficult to explain through independent decision-making. Early dismissal motions often test whether those allegations support a plausible inference of agreement.
Coordinate Separate Settlement Agreements Through a Unified Approval Process
The agreements with Horizon, Crowley, Sea Star, and Alexander Chisholm involved separate settlement terms but proceeded through a coordinated approval process. The court reviewed the negotiations, available discovery, class notice, fairness hearing, settlement values, and fee issues before granting final approval. In a multi-defendant MDL, counsel should present consistent class definitions, allocation procedures, notice materials, and explanations of how the separate agreements operate together.
The Puerto Rican Cabotage Antitrust Litigation (MDL No. 3:08-md-1960 (DRD)) arose from direct-purchaser allegations that major ocean carriers coordinated customer allocation, rigged bids, and fixed rates, surcharges, and other fees for freight transported between the U.S. mainland and Puerto Rico from May 1, 2002, through April 17, 2008. After the consolidated complaint was filed in 2008, the proceedings included dismissal motions, settlement negotiations, class notice, a fairness hearing, and additional review of attorneys’ fees. On September 13, 2011, the court granted final approval to the settlements with Horizon, Crowley, Sea Star, and individual defendant Alexander Chisholm, confirming an actual combined settlement value of $65.85 million. The amended opinion resolved the approval, valuation, and attorneys’ fee issues associated with those settlements, which combined cash recovery with optional base-rate freezes tied to future shipping charges.
What conduct did the direct purchasers allege?
The plaintiffs alleged that major ocean carriers fixed rates and surcharges, rigged bids, and allocated customers for shipping services between the U.S. mainland and Puerto Rico. The actions were consolidated in MDL No. 3:08-md-1960 in the U.S. District Court for the District of Puerto Rico.
Which carriers and individuals were named in the consolidated complaint?
The complaint named Horizon Lines entities, Sea Star Line, Crowley Maritime and Crowley Liner Services, Trailer Bridge, and several executives. The settlements discussed in the September 13, 2011 amended opinion involved Horizon, Crowley, Sea Star, and Alexander Chisholm.
When did the alleged price-fixing and bid-rigging occur?
The complaint covered alleged conduct from May 1, 2002, through April 17, 2008. That period defined the scope of the direct-purchaser class claims addressed in the MDL.
What was the actual value of the approved settlements?
The court confirmed a combined settlement value of $65.85 million. That amount consisted of $52.25 million in cash settlement funds and $13.6 million attributed to base-rate-freeze options selected by eligible class members.
How did the court evaluate the base-rate-freeze options?
The court considered the nature and actual value of the base-rate-freeze options when determining the settlement value used for attorneys’ fee review. Rather than relying on the initial projected value, it attributed $13.6 million to the options selected by eligible class members and then applied the percentage-of-the-fund method with a lodestar cross-check.
What did the September 13, 2011 amended opinion decide?
The court granted final approval to the settlements with Horizon, Crowley, Sea Star, and Alexander Chisholm. It also reviewed attorneys’ fees under the percentage-of-the-fund method and used a lodestar cross-check.
Price Fixing
Ocean Shipping
Freight Forwarding
Financial Analysis
Microeconomics
Damages Calculations
Marine Transportation
Bid Rigging
Maritime, +4
Maritime
Marine Engineering, +3
Maritime
The court granted final approval to the settlements with Horizon, Crowley, Sea Star, and Alexander Chisholm. It also reviewed attorneys’ fees under the percentage-of-the-fund method and used a lodestar cross-check.