FEDERAL MARITIME COMMISSION

Served: December 23, 2004

ORDER

This matter is before the Federal Maritime Commission upon a petition by Crowley Logistics, Inc. and Apparel Transportation, Inc. (“Crowley” and “Apparel Transportation,” or collectively, “Petitioners”) filed on February 23, 2004, pursuant to Rule 69 of the Commission’s Rules of Practice and Procedure, 46 C.F.R. §502.69 (2003), to appeal a Commission staff action, the issuance of an OTI license, to Apparel Logistics Inc. (“Apparel Logistics” or “Respondent”). The Petitioners request that the Commission reverse its decision to issue Apparel Logistics an OTI license; revoke or suspend that OTI license; or investigate the issuance of that license. Petition at 6.

The Respondent submitted its reply brief on March 11, 2004, denying any wrongdoing and accusing the Petitioners of attempting to “thwart competition” by interfering with the issuance of its OTI license. Apparel Logistics Reply at 1-2. The Respondent also requests that the Commission deny the petition on the basis that there are no grounds to suspend its license, as the Petitioners failed to establish that the Commission issued the license in violation of the agency’s licensing standards. Id. at 1-2, 5.

For the reasons set forth below, we have determined to deny Crowley and Apparel Transportation’s petition.

BACKGROUND

A. The Petition

Petitioners explain that on June 25, 2003, five days before the close of Crowley’s acquisition of Apparel Transportation, Mr. Manuel Lescano, an officer and director of Apparel Transportation, organized a new corporation pursuant to Florida law under the name Apparel Logistics, Inc. Petition at 5. Petitioners allege that Apparel Logistics filed an FMC OTI licensing application in August 2003, with Mr. Lescano as its qualifying individual. In response to the Federal Register notice regarding the Apparel Logistics license, Petitioners allege that they filed a protest on September 30, 2003 with the Bureau of Consumer Complaints and Licensing (“BCCL”) due to the similarity of the Apparel Logistics name to that of Apparel Transportation. Id. at 5 (citing 68 Fed. Reg. 52,587-52,588 (Sept. 4, 2003)). The Petitioners alleged that they filed suit in the 11^th Florida Circuit and served Mr. Lescano, the owner of Apparel Logistics, Inc., just days prior to his “misrepresentation to the FMC’s staff.” Id.

Petitioners also submit that the act of their former employee seeking a license under the Apparel Logistics name shows deliberate wrongdoing. Id. at 6. Petitioners aver that the Respondent’s trade name in its OTI license creates confusion and that the Commission has authority to refuse to issue a license that may create confusion in the marketplace. Petition at 6 (citing the Commission’s licensing requirements at 46 C.F.R. sections 515.13 and 515.14(a) (2003)).¹

Petitioners assert that due to the thousands of NVOCC tariffs published, there will be an “obvious and substantial likelihood of confusion” over Apparel Logistics’ and Apparel Transportation’s tariffs, as they provide services to the same customers in the same trades. Id. at 9. Petitioners allege that another logistics company mistakenly sent a check payable to “Apparel Logistics Inc.” to Petitioners, evidencing the confusion caused by the alleged name similarity. Id. at 2, 6.

Petitioners contend that the Respondent uses this confusion to deceive customers into doing business with it. Id. at 1, 6. Petitioners allege that Apparel Logistics hired “several” of the Petitioners’ employees who knew of Apparel Transportation’s accounts and operations. Id. at 6. Petitioners also assert that Apparel Logistics held an open house reception in Guatemala thought by “several” of the Petitioners’ customers to be hosted by Apparel Transportation. Id. at 6.

Petitioners urge that allowing Apparel Logistics to operate under its OTI license will result in the same type of confusion that the Bureau of Customs and Border Protection (“Customs”) recognized when it refused to issue Customs broker licenses to companies with names similar to existing licensees. Id. at 10. According to Petitioners, in Customs Ruling No. 114267, 1998 WL 1093944 (Customs 1998) (“Kamino Case”), a company that sought to obtain a Customs broker license once under the name Kamino Air Transport, Inc., and then again under Kamino International Inc., had been denied both times because those names were too similar to another licensed company, Kamino Air Transport. Petitioners explain that Customs surmised that importers and Customs would easily confuse the two because of the similarity. Id. at 11-12.

Petitioners also argue that the Respondent’s qualification to hold an OTI license is questionable, as the Respondent’s actions fail to meet the level of character and integrity required by the Commission’s OTI licensing standards. Id. at 8,9. The Petitioners assert that the Respondent misrepresented facts on the OTI license application form by stating that no suits had been brought against it. Id. at 9.

B. Reply to the Petition

In its reply brief, Apparel Logistics asserts that there are no grounds to suspend or revoke its OTI license and that the Commission’s staff was correct in issuing the license. Apparel Logistics Reply at 1-2. Apparel Logistics also urges that it is improper for the Commission to issue a “de facto injunction,” since the Florida court has refused to do so. Id. at 9. Moreover, Apparel Logistics avers that it should be permitted to continue conducting its business because nothing has changed about its company since the FMC granted it an OTI license. Id. at 2.

The Respondent denies the Petitioners’ allegations that it lacks the necessary character qualifications. Apparel Logistics concedes that on November 3, 2003, the Petitioners sought an injunction against it in the 11^th Florida Circuit. Id. at 3 (citing Exhibit A). However it also contends that the Petitioners’ counsel, Mr. Daniel W. Raab, admitted that “no formal complaint was filed” in a letter to the Respondent’s counsel dated November 6, 2003.²   Id. at 3 (citing Exhibit B). As such, Apparel Logistics asserts that the Commission was made into an “inadvertent accomplice” by Petitioners in their efforts to disrupt competition until the Commission recognized the “delay tactic” and issued the license on February 13, 2004. Id. at 4.

Apparel Logistics denies hiring Petitioners’ employees and contends that even if it had, there would have been nothing improper about doing so, as no non-compete agreements had been executed. Id. at 5. Apparel Logistics also avers that the hiring of employees while its license was still pending does not constitute “providing services in the U.S. foreign commerce.” Apparel Logistics furthermore, characterizes Petitioners’ allegations regarding the “open house” in Guatemala as baseless. Id. at 6. Apparel Logistics avers that the event was by invitation only and that its invitation clearly represented the commencement of a new business. Id. (referring to Exhibit C). Pointing to the lack of sworn testimony supporting Petitioners’ “confused customers” claim, Apparel Logistics surmises that any reasonable customer would have known that the event was solely held to celebrate the inauguration of Apparel Logistics. Apparel Logistics avers that it did not intend to deceive or confuse customers when it chose its name. Id. at 2. Apparel Logistics claims that Mr. Lescano chose the name Apparel Logistics, Inc. because he liked it. Id.

Finally, Apparel Logistics avers that the Customs case cited by Petitioners is dissimilar in three ways. Id. at 7. First, Apparel Logistics submits that Customs denied two corporations from using ‘Kamino’ as that name is distinctive and unusual and may confuse people. Id. (citing Customs Ruling No. 114267, 1998 WL 1093944 (Customs 1998)). Apparel Logistics contends that in the instant case, the word “Apparel” is neither distinctive nor unusual and is used by several businesses in southern Florida. Id. (citing Exhibit D). Second, Apparel Logistics distinguishes the Kamino case from the matter at issue because Apparel Logistics is seeking an OTI license, not a Customs broker license. Third, Apparel Logistics points out that Customs granted it permission to use its trade name at the Port of Miami in September 2003. Id. (citing Exhibit E).

 DISCUSSION

We deny Crowley and Apparel Transportation’s petition on three grounds: the petitioner failed to establish a prima facie case to reverse the Commission staff action to issue Apparel Logistics an OTI license; the petition fails to meet the required burden of proof to revoke or suspend Apparel Logistic’s OTI license; and the petition fails to develop evidence to show that the Commission staff erred in granting the Respondent an OTI license to warrant the Commission initiating an investigation.

1. Reversing the Staff Action

Commission rules require that Apparel Transportation establish sufficient facts to warrant the reversal of the issuance of the OTI license to Apparel Logistics. 46 C.F.R. §502.69 (2003). Based on this rule, Crowley and Apparel Transportation’s petition must be rejected. Apparel Transportation has only submitted theories that Apparel Logistics intended to confuse and deceive customers into business relationships by using a name similar to Apparel Transportation.

Moreover, Apparel Transportation’s use of the Kamino case fails to establish a prima facie case, as Kamino is distinguishable from the case at hand. ‘Kamino’ is a unique name, whereas the name ‘Apparel’ is common. ‘Kamino’ involved a Customs broker license whereas this matter involves an OTI license. Moreover, Customs denied a company from using the ‘Kamino’ name, whereas Customs granted Apparel Logistics permission to use its trade name. Accordingly, because Crowley and Apparel Transportation’s petition fails to establish facts sufficient to warrant reversing the staff issuance of an OTI license to Apparel Logistics under Rule 69, it is denied.

 2. Revoking and Suspending Respondent’s OTI License

Commission regulations at 46 C.F.R. § 515.16(a) (2003) provide in pertinent part that a license may be revoked or suspended for any of the following reasons:

(1) Violations of any provision of the Act, or any other statute or Commission order or regulation related to carrying on the business of an ocean transportation intermediary;

 

(2) Failure to respond to any lawful order or inquiry by the Commission;

 

(3) Making a materially false or misleading statement to the Commission in connection with an application for a license or an amendment to an existing license;

 

(4) Where the Commission determines that the licensee is not qualified to render intermediary services; or

 

(5) Failure to honor the licensee's financial obligations to the Commission.

Though the Commission has never addressed the issue whether using a name similar to another business’s name constitutes bad character in an OTI license application, precedent established in past cases does not support revoking or suspending the Respondent’s license in this case. Prior decisions have held that revoking or suspending an OTI license should be limited to the most egregious circumstances, such as OTIs violating the Shipping Act or Commission regulations, committing other federal offenses, or materially misrepresenting information regarding their qualifications. See Stallion Cargo, Inc. —Possible Violations of Sections 10(a)(1) and 10 (b) (1) Of the Shipping Act of 1984, 29 S.R.R. 665, 683-4(2001); AAA NordStar Line Inc.--Revocation of License No. 12234 29 S.R.R. 663 (2002); Commonwealth Shipping Ltd., Cargo Carriers Ltd., Martyn C. Merritt and Mary Anne Merritt—Submission of Materially False or Misleading Statements to the Federal Maritime Commission And False Representation of Common Carrier Vessel Operations,29 S.R.R. 1408, 1412-1414 (2003). Here, the staff determined that the Respondent met the necessary qualifications to hold an OTI license, after investigating the accuracy of Apparel Logistics’ application along with the integrity and character of Apparel Logistics pursuant to 46 C.F.R. §515.13 (2003). Based on case law and regulations as applied to the facts of this case, Crowley and Apparel Transportation’s petition is denied.

3. Investigation

The Petitioners here failed to develop any evidence to show that the Commission staff erred in granting the Respondent an OTI license. We find that an investigation is unwarranted, and therefore Crowley and Apparel Transportation’s petition is denied.

CONCLUSION

Crowley and Apparel Transportation have failed to show that reversing the staff decision to issue a license, revoking or suspending the license, or initiating an investigation is warranted. Accordingly, the Commission denies Crowley and Apparel Transportation’s petition.

THEREFORE, IT IS ORDERED, That Crowley and Apparel Transportation’s Petition to reverse the staff decision to issue an OTI license to Apparel Logistics, or in the alternative to revoke or suspend that license or initiate an investigation, is denied; and

IT IS FURTHER ORDERED, That this proceeding is discontinued.

By the Commission.

Bryant L. VanBrakle

Secretary

ENDNOTES:

1.  46 C.F.R. § 515.13 (2003) provides:

The Commission shall conduct an investigation of the applicant’s qualifications for a license. Such investigations may address:

(a) The accuracy of the information submitted in the application;

(b) The integrity and financial responsibility of the applicant;

(c) The character of the applicant and its qualifying individual; and

(d) The length and nature of the qualifying individual’s experience in handling ocean transportation intermediary duties.