S E R V E D   March 27, 2002 

Respondent American President Lines, Ltd. ("APL") filed a motion for summary disposition⁽¹⁾ as to complainants' claims for reparations for categories of shipments that, in aggregate, account for 517 of the 554 total APL shipments for which complainants⁽²⁾ seek reparations (leaving 37 shipments for later consideration). These categories of shipments include: (i) shipments for which complainants do not claim to have paid APL's charges to APL, (ii) shipments for which complainants do claim to have paid APL's charges to APL, but for which they have produced no documentary proof or allegedly inadequate documentary proof, (iii) shipments that were not in the FMC-regulated trade between the mainland United States and Guam, and (iv) shipments that pre-dated March 9, 1988 (the "cut-off" date for seeking reparations).⁽³⁾ The specific shipments within each category are identified by APL by bill of lading number in Attachments 1-8 to APL's instant motion.

APL argues that complainants cannot recover reparations for shipments (e.g., prepaid shipments) for which they concede they did not pay APL's charges directly to APL. Complainants take the position that the mainland shipper paid APL directly, but that complainants "ultimately" should be deemed to have paid APL's charges for prepaid shipments because it should be assumed, as a matter of general economic principles, that the shippers in the mainland passed those charges on to the consignees in Guam as part of the invoice price of the goods sold by the former to the latter.⁽⁴⁾

APL states that assuming arguendo in the case of each prepaid shipment both that the mainland shipper paid APL and that the mainland shipper's invoice to the complainant included a pass-through of all of APL's charges, complainants cannot recover reparations for prepaid shipments based on longstanding case law holding that only the direct purchaser of transportation services-i.e., the entity that paid the carrier directly-has standing to seek reparations for allegedly unlawful rates.

APL states that each of the complainants stipulated that it would not present any evidence to the effect that any of APL's rates were unlawful by reason (in whole or part) of any impact of the rates on complainants' revenues, profits, or profitability, including any impact on the amount of profit achieved on any sales transaction involving any commodity transported by APL.

APL states that the record establishes that complainants were not harmed by any pass-throughs from mainland shippers of prepaid freight charges, i.e., each of the three private complainants admitted that it passed APL's freight charges on to its own customers; that the three private complainants also testified that they set their prices based on a percentage markup of their landed cost for an item, so that to the extent an amount equal to APL's freight rates was included in the landed cost of prepaid shipments, complainants' markup included an additional component of profit based on a percentage of APL's rates-a markup percentage that was nearly 40 percent for the retail operations of PIC (Gibsons) and Townhouse; and that the markup for the MBI and PIC (PW) wholesale operations was on the order of 15-20 percent.

APL argues that complainants' reparations claims for the shipments for which they concede that they did not pay APL directly (e.g., prepaid shipments) must be dismissed pursuant to Oakland Motor Car Co. v. Great Lakes Transit Corp., 1 U.S.S.B.B. 308, 310-311 (1934), holding that eligibility to seek reparations for allegedly unlawful rates is limited to the entity that paid the rate to the carrier directly. APL cites other cases: California Cartage v. Pacific Maritime Association, 23 S.R.R. 420, 427 (FMC 1985) ("the Commission has consistently construed Section 22 as not permitting parties who have not actually paid contested charges to claim them as reparations in the absence of a valid assignment of the claim from the paying party"); Trane Co. v. South African Marine, 19 F.M.C. 375, 378 n.9 & accompanying text (I.D. of Judge Kline, Adopted 1976) ("the complainant must show that he has paid the freight or has succeeded to the claim in a valid fashion such as by assignment"); Carton-Print v. Austasia Container Express, 20 F.M.C. 31, 34 (I.D. of Judge Kline, Final 1977) ("[i]n order to seek reparations . . . complainant must either show that he has paid the freight or has a valid assignment of the claim from the person who did pay the freight"); 3M v. Hapag-Lloyd, 20 S.R.R. 1020, 1021 n.3 (FMC 1981); Colgate Palmolive Co. v. Grace Line, Inc., 11 S.R.R. 982, 983 (I.D. 1970); and FMC Corp. v. Argentine Line, 19 S.R.R. 1490, 1491 (Settle. Off. 1980). The rule set forth in these cases is reflected in the FMC's regulations, which require a complainant to include in its reparations statement the "name of person paying charges in the first instance." 46 C.F.R. § 502.252 (Exhibit 1).

APL emphasizes that, as noted in footnote 3, for only 50 of the 155 prepaid shipments have complainants provided documentation which they claim indicates that they in fact paid the mainland shipper an amount allegedly attributable to APL's charges to the mainland shipper. APL urges that for the other 105 prepaid shipments, the reparations claims would have to be dismissed in any event for lack of such payment documentation, under the decided cases.

APL acknowledges that complainants have submitted adequate documentation of payment-in the form of a copy of a canceled check payable to APL-for 42 of the 399 collect shipments. APL contends, however, that, as to the other 357 collect shipments for which complainants claim to have paid APL directly (including both 301 shipments for which there is no documentation whatsoever and 56 shipments for which there is allegedly inadequate documentation), complainants' reparations claims must be dismissed for lack of proof that they did in fact pay APL's tariff charges to APL.

APL states that complainants seek a finding of "implicit proof of payment," i.e., a finding that APL's "bill of lading charges were paid by the complainant" based on a "presumption" that APL would not have provided "continuing service to the complainant" over an extended time period unless it were being paid. But, APL urges, awarding reparations on the basis of such a "presumption" of payment is impermissible.

APL states that GovGuam's attempt to avoid the established rules by requesting a "presumption" based on "implicit proof of payment" is audacious in light of its admitted loss of the actual documentary evidence that would have avoided the alleged need for any presumption; that, as a starting point, it is undisputed that, for every shipment for which a complainant paid APL's tariff charges to APL,⁽⁵⁾ the relevant complainant had exclusive possession of the evidence that such payment was made-i.e., a canceled check payable to APL; and, moreover, that complainants had document retention policies in place that required these canceled checks to be retained for at least five or seven years, respectively.

APL states that very early in the case-in 1990-when the documentation was still fresh (and long before the expiration of the retention periods required by complainants' document retention policies), APL filed discovery requests specifically seeking production of copies of all of complainants' canceled checks evidencing payments to APL; that complainants objected to this discovery on the ground that discovery of proof-of-payment documentation should be deferred until a separate reparations phase; that respondents considered it important that discovery of the canceled checks not be deferred, and moved to compel complainants to produce their canceled checks promptly; and that in 1991, Judge Ingolia rejected complainants' position that discovery of proof-of-payment documentation should be deferred, and ordered complainants to produce all of their proof-of-payment documentation-specifically including all of their canceled checks payable to APL-before submission of the evidentiary case on rate reasonableness:

GovGuam and the four private complainants are required to identify whether they paid the tariff charges directly to the carrier on all shipments for which reparations are to be claimed and to provide documentation establishing proof of payment for each such shipment in the form of a receipt or canceled check or any other comparable document that identifies who made the payment, as promptly as the documentation becomes available, but in no event later than the date of submission of their direct case. . . . (11/1/91 Procedural Order, p. 2; emphasis added by APL.)

APL states that, in response to Judge Ingolia's order, complainants produced a number of check stubs and canceled checks, which are basically the same payment documents that complainants have included in their April 2, 2001 evidentiary case on reparations; and that, in so doing, complainants flatly represented that these were the documents "reflecting payment for shipments on APL . . . vessels, for which they claim reparations," without in any way caveating that there were a large number of other shipments for which they would claim reparations but for which they had not produced proof-of-payment documents.

APL states that after complainants submitted their direct case in the "liability phase" in 1992, respondents moved for an order dismissing any claims for reparations for any shipments for which complainants had not produced proof-of-payment documentation as required by Judge Ingolia's 1991 order; that the motion explained that complainants had "in no way indicated that the documentation they produced was anything but complete," but stated that such an order would be appropriate in order to avoid a possibility of future surprise.

APL states that complainants opposed the motion to dismiss by representing that "[a]t this time, complainants believe they have provided virtually all of the information requested by respondents" (emphasis added by APL)-again without any caveat whatsoever that they might claim reparations for numerous additional shipments for which they had not provided canceled checks in response to Judge Ingolia's order; that the currently-presiding ALJ denied respondents' motion to dismiss on the ground that it was unnecessary based on complainants' representation that they had provided proof-of-payment documentation for "virtually all" shipments for which they would seek reparations, i.e., that there were virtually no other shipments for which they would seek reparations and claim to have paid APL:

GovGuam claims to have complied with [Judge Ingolia's 1991] Order and submitted the required documentation. Respondents do not point to any respect in which the documentation is incomplete or any manner in which GovGuam has failed to comply with the November 1, 1991, Order. Respondents' request for further relief at this point in the proceeding is not shown to be necessary and is denied. [August 20, 1992 Order, p. 7; emphasis added by APL.]

APL states that this seemed definitively to settle the matter by making clear that the universe of shipments for which complainants claimed to have paid APL was the universe that complainants themselves had defined when, pursuant to the order requiring production of all relevant canceled checks, they produced a number of checks without caveat, and then formally represented that those checks covered "virtually all" shipments for which they paid APL. APL points out that, given this, it did not-and could not-pursue the issue of canceled checks further.

APL states that complainants had canceled checks for all shipments for which they paid APL; that APL did everything possible within the rules of litigation to obtain those canceled checks from complainants, while the trail was fresh; that APL filed document requests, moved to compel and obtained an order requiring that complainants produce canceled checks for all shipments for which they claim they paid APL; that APL double-checked the completeness of complainants' production in response to the order by filing a motion to dismiss that wound up eliciting a representation by complainants that their production was, indeed, complete; that APL did all this during the 1990-1992 time frame, while the transactions were recent and the canceled checks remained available to complainants under their own document retention policies; that in the remand phase, many years later, complainants have for the first time taken the position that there were a large number of shipments for which they paid APL but for which they have not produced proof-of-payment documentation; and that, in taking this new position, complainants have made no assertion, either in their evidentiary submission or in their recent discovery responses, that they did not follow their document retention policies with respect to the canceled checks; nor have complainants provided any explanation as to how it could have happened that they failed, in the face of the above-described discovery requests and order to produce canceled checks for hundreds of shipments for which they now claim they paid APL.

APL states that it is clear, moreover, that GovGuam was on notice from the very outset that it would need to provide proof of payment for all shipments for which it claimed reparations, and that the above-mentioned discovery requests, motions and orders left no room for doubt about that requirement; nor did Rule 252 of the Commission's Rules of Practice and Procedure, 46 C.F.R. § 502-252.

APL points out that it is also relevant to note that the three private complainants are not "mom and pop" stores, but rather large, sophisticated businesses as to which it is reasonable to expect reasonable record-keeping practices, and that complainants' requested "presumption" cannot be supported by an alleged equitable need to redress economic harm (which is nonexistent) or to compensate for legal expenses (which are also nonexistent).

APL contends that there are no equities supporting complainants' request for a "presumption" that would relieve them of the normal requirements of documentary proof in reparations cases; that complainants' requested "presumption" that they paid APL for each of the collect shipments is unsustainable on the facts; that complainants' requested presumption has two components-(1) that APL was paid for every collect shipment and (2) that in each case the payment was made by a complainant; and that the fact on which the requested presumption is based-continuing service by APL over an extended period of time-is relevant (if at all) only to the first component.

APL states that the fact that a carrier provided service over an extended period may tend to suggest as a general matter that the carrier was being paid by someone in most instances; that, however, the fact of continuing service does not suggest that the carrier was paid in all instances, or in any particular instance, must less establish, that the carrier was being paid by any particular person(s); and that complainants' evidentiary submission contains no evidence whatsoever to bridge the gap and prove that the payments were made by a complainant..

APL states that, in fact, complainants' evidentiary submission suggests a possibility that is contrary to their "presumption" but that they nowhere confront, i.e., that for many of the collect shipments APL was paid, not by a complainant, but by a freight forwarder; that the APL bills of lading submitted by complainants show that, out of the 357 collect shipments for which they did not produce a canceled check, 254 shipments (71 percent) involved freight forwarders, as identified in Attachment 4 to APL's instant motion.⁽⁶⁾

APL states that it is commonplace in the shipping industry for a carrier to be paid by a forwarder rather than by the cargo interest itself; that this is significant because, when a forwarder is the entity that paid the carrier directly, the Commission requires that the shipper or consignee, in order to seek reparations from the carrier, must prove that it reimbursed the forwarder; that GovGuam's evidentiary submission contains no documentation evidencing payment by any complainant to any forwarder; and that complainants have admitted that they have no such payment documentation.

APL states that, in short, complainants' requested "presumption" that they paid APL for all collect shipments must be rejected on its own terms because the fact on which the presumption is based-continuity of service over an extended period-suggests nothing about the identity of the person who paid the carrier, and because complainants have ignored the possibility that APL could have been paid by freight forwarders in many instances.

APL states that complainants' request for a "presumption" of payment is barred by Commission case law; that the Commission has held that the fact that a particular shipment is denominated on a bill of lading as "freight collect" or "freight prepaid" does not justify a presumption either (1) that payment was actually made to the carrier or (2) that payment to the carrier was made by any particular person (including the consignee in the case of collect shipments or the consignor in the case of prepaid shipments), citing Snyder General Corp. v. South African Marine Corp., 22 S.R.R. 373 (I.D., administratively final 1983); Clark Equipment Co. v. Farrell Lines, Inc., 20 S.R.R. 694 (Settlement Off. 1980); International Harvester Co. v. South African Marine Corp., 21 S.R.R. 841, 843 n.2 (ALJ 1982); Mine Safety Appliances Co. v. Springbok Shipping Co., 21 S.R.R. 697 (Settlement Off. 1982); Mitsubishi International Corp. v. N.Y.K. Line, 18 S.R.R. 426, 427 (FMC 1978); Bristol Meyers Co. v. U.S. Lines, Inc., 21 S.R.R. 349, 350 (FMC 1981); and Williams, Clarke Co. v. Sea-Land Service, Inc., 17 S.R.R. 1684 (ALJ, adopted 1978); that in Cotton Import & Export Co. v. Sea-Land Service, Inc., 20 S.R.R. 260 (FMC 1980), for example, the Commission held that, in order to obtain reparations, the complainant would need to provide copies of both the front and the back of the check, since both sides of the document are necessary to show endorsement by the carrier and payment by the bank; and that the Commission further stated that, even where copies of both a front and a back may be submitted, reparations must also be denied if there is a question whether they came from the same check. Id. at 262.

APL contends that complainants' requested "presumption" of payment is especially unwarranted here, given their failure to retain the evidence that would render the presumption unnecessary; that complainants can be significantly faulted for their loss or destruction of any such canceled checks; and that if there were a significant number of shipments for which complainants paid APL beyond those for which they have submitted checks, complainants were, at the very least significantly negligent in losing or destroying the canceled checks for those additional shipments in the face of discovery requests and orders requiring their retention and production.

APL states that in the absence of the favorable presumption that cannot be granted, complainants cannot fill the void in their evidentiary case; and that their reparations claims for the collect shipments for which they have not submitted payment documentation must be dismissed for failure to satisfy a requisite element of their burden of proof, i.e., proof that they paid APL the unsubstantiated amounts they claim.

APL states that complainants' requested "presumption" that they paid APL for each and every one of the 357 collect shipments for which they lack documentation of payment is unsustainable on the facts, contrary to the established case law, and impermissible by reference to their own conduct in losing or destroying the evidence that would render any presumption unnecessary, and that an order should be entered dismissing complainants' reparations claims with respect to:

(1)The shipments for which complainants have submitted no payment documentation whatsoever, which are identified in APL's Attachment 2, and

(2)The shipments for which complainants have submitted incomplete and inadequate payment documentation, i.e., shipments for which there are check stubs but no checks, identified in Attachment 3 of APL's instant motion.

 

APL states that in the table submitted with their evidentiary case listing the APL shipments for which they claim reparations,⁽⁷⁾ complainants have included a number of shipments which were not in the FMC-regulated trade between the U.S. mainland and Guam, including (1) 50 shipments (Att. 5) to Saipan, (2) 17 shipments (Att. 6) that were received by APL at U.S. East Coast or inland points for which complainants made no attempt to prove that they moved in APL's FMC-regulated port-to-port service (as opposed to APL's East Coast and inland service subject to Interstate Commerce Commission jurisdiction); and (3) shipments between a foreign (as opposed to U.S. mainland) point and Guam.

APL states that there are four shipments (Att. 7) included in complainants' spreadsheet that were moved from a foreign country to Guam; that two of the shipments originated in Singapore, and two in Canada; that these shipments are presumptively foreign trade shipments that were subject to the Shipping Act of 1984 which deals with shipments between a place in a foreign country and a place in the United States (e.g., Guam), not the 1916 Shipping Act which deals with shipments between two places in the United States; and that complainants have submitted no evidence whatsoever indicating otherwise.

APL states that the three private complainants have stipulated that "no reparations apply to any shipments with a sail date prior to March 9, 1988."⁽⁸⁾ APL states that complainants' spreadsheet includes 17 shipments covered by this stipulation, and that the reparations claims for these shipments should be dismissed pursuant to the stipulation.

In its reply, GovGuam does not oppose the dismissal of claims that are clearly not payable in this proceeding, such as claims for shipments not within the domestic offshore jurisdiction of the FMC, i.e., those destined for Saipan or that originated on the U.S. East Coast. (Reply, pp. 12-13.)

In the circumstances, since complainants failed to meet their burden of establishing FMC jurisdiction over the shipments in issue and since they did not oppose APL's arguments as to shipments in APL's Attachments 5, 6, 7 and 8, those shipments will not be further considered and will be dismissed.

Sea-Land filed a separate motion for summary disposition of certain claims. It generally endorses the positions advanced by APL in its motion.

GovGuam seeks reparation for 262 shipments carried by Sea-Land in the oceanborne trade of the United States between the West Coast of the United States, Hawaii and the Territory of Guam, from Sea-Land's entry into the trade in 1987 until June 23, 1989, when Sea-Land effectively transferred operations from FMC-tariffed to ICC-tariffed offerings to the shipping public.

Sea-Land seeks dismissal of 257 of the 262 shipments because of the alleged absence of evidence necessary to sustain even a prima facie showing sufficient to survive its summary motion. (Sea-Land acknowledges that complainants have provided canceled checks showing payment to Sea-Land by a named complainant for five shipments.) The categories of shipments for which Sea-Land now seeks a ruling removing them from the reparations phase of the proceeding are:

1. GovGuam's statement includes nine numbers which have been left blank and will be stricken. They are Nos. 1-7, 187 and 242.

1a. Post-June 23, 1989 shipments from the U.S. West Coast to Guam;

2. Post-June 22, 1989 shipments from Hawaii to Guam;

3. Prepaid shipments where there is no evidence that any of the named Complainants directly paid Sea-Land for the ocean transportation;

4. Shipments, prepaid or collect, for which Complainants have offered no proof that a complainant either paid ocean freight charges to Sea-Land or reimbursed forwarders acting on Complainants' behalf who paid freight charges to Sea-Land; and

5. Miscellaneous interior point or other intermodal shipments of a nature subject to previous rulings excluding such shipments from this proceeding and shipments that appear to be duplicative, anomalous, or for which essential shipment information is missing.

In response to the contention that complainants have failed to provide proof of direct payment in the form of canceled checks, complainants urge that they have submitted documentation that clearly proves payment of freight charges to respondents: paid bills of lading; that this alternative documentation is appropriate here, without an adverse inference being applied due to lost evidence, insofar as APL has not shown intentional destruction or negligence on the part of complainants; that Sea-land has stipulated that it was paid for these shipments; and that there is additional strong commercial evidence supporting the fact of payment by complainants: respondents continued to ship to complainants for the entire period at issue.

With respect to prepaid shipments, complainants contend that they have submitted adequate documentation to support their claims for reparations; that invoices from complainants' U.S. mainland suppliers show payment of freight by complainants; that respondents continued to carry prepaid shipments delivered to complainants as consignees for an extended period of time; that these circumstances are reasonable proof that respondents were paid the freight and that complainants were the parties that paid it.

Complainants urge that they have also submitted adequate documentation to support their claims for reparations with regard to freight collect shipments; that respondents have never alleged that they were not paid for these shipments and complainants have submitted bills of lading and related shipping documents showing that they paid the freight on these shipments; and that complainants should not be denied a remedy on the basis that they lost the canceled checks on some of these shipments.

Finally, complainants urge that the FMC should take the equities of this case into consideration; and also that respondents have charged the shippers in the Guam trade unjust and unreasonable rates for years.

GovGuam argues that the gravamen of its complaint is that trade-wide violations of the Shipping Act, 1916, exist and that the FMC has a responsibility to ensure that all of the shippers in the Guam trade are provided the protections of section 18(a) and a trade-wide remedy should be ordered to prevent unjust enrichment of the respondents.

Gov Guam states that Sea-Land has stipulated and APL has not disputed that they carried the subject cargo and were paid for that carriage; that it is an inappropriate litigation tactic to now question at this stage of the proceeding whether these shippers actually made these shipments they claim to have made and paid the freight they claim to have paid; that complainants have provided "paid" bills of lading; that these bills of lading show that the complainants were the consignees; that, on a freight collect shipment, which is also noted on the bill of lading, the only reasonable assumption is that the consignee was the party that paid the freight; that respondents either received payment directly from the complainants or from agents acting on behalf of the complainants; and that continued service for a long period of time clearly indicates that payment was made.

Complainants contend that they should be permitted to prove that they paid the freight on prepaid shipments by any reasonably reliable documentation; that documentation showing that the regular suppliers of complainants on the mainland U.S. included the shipping costs as part of the costs of shipments should be sufficient to show that complainants actually paid the freight on those shipments; that the fact that respondents continued to accept prepaid shipments where the complainants were the consignees on the bills of lading also indicates that respondents were actually paid by complainants on these shipments; that the shipping costs were separately stated as a pass through cost item and were not incorporated into the costs of the goods; that the shipping costs are identified and co-related to specific ocean carrier bills of lading under which they were shipped; and that under the totality of circumstances surrounding this case that there can be no reasonable doubt that the complainants are the parties that paid the freight on the prepaid shipments subject to this proceeding and should be entitled to reparations for the unjust and unreasonable freight rates they paid.

Complainants strongly believe "that every decision in this case from this point forward must be made within the context of the extraordinary damage that has been done to the Guam economy by virtue of the systematic and long-standing disregard of the just and reasonable standard of section 18(a) of the Shipping Act, 1916, 46 U.S.C. app. § 817(a)."

On March 25, 2002, APL filed a reply to GovGuam's opposition, as did Sea-Land.

Sea-Land's Memorandum of Law accompanying its motion, like the filing of APL, has been utilized extensively in this ruling.

This ruling addresses respondents' motions for summary disposition seeking dismissal of complainants' claims for reparations as to prepaid, collect and other shipments.

Complainants' theory of the case is that while the mainland shippers paid respondents directly, complainants ultimately should be deemed to have paid respondents' charges for prepaid shipments because it should be assumed, as a matter of general economic principles, that the shipper in the mainland passed those charges on to the consignees in Guam as part of the invoice price of the goods sold by the shippers in the mainland to the consignees in Guam.

The record shows that each of the complainants admitted that it passed APL's freight charges on to its own customers. (APL Ex. G-2, pp. 2-4; PIC, MBI and Townhouse's separate June 29, 1990 Response to Interrogatory 5 of APL's First Set of Discovery Requests.) The three private complainants also testified that they set their prices based on a percentage markup of their landed cost for an item⁽⁹⁾ so that to the extent that an amount equal to APL's freight rates was included in the landed cost of prepaid shipments complainants' markup included an additional component of profit based on a percentage of APL's rates-a markup percentage that was nearly 40 percent for the retail operations of PIC (Gibson) and Townhouse and about 15-20 percent for the wholesale operations of MBI and PIC(PW). (Kolbe WD p. 2-22.)

The record thus demonstrates that complainants did not suffer any economic harm from APL's rates, and instead garnered an economic benefit because they passed their shipping costs on to their customers with an added markup based on those costs. Complainants have not shown that they have any equities with respect to prepaid shipments which could warrant the relief sought even if it were established that the FMC has power to grant equitable relief. Moreover, each of the complainants formally stipulated that it would not present any evidence to the effect that any of APL's rates were unlawful by reason (in whole or in part) of any impact of the rates on complainants' revenues, profits or profitability, including any impact on the amount of profit achieved or any sales transaction involving any commodity transported by APL. (APL Ex. G-1, pp. 4-5.)

The rule of law, as noted by the parties, was established in Oakland Motor Car Co. v. Great Lakes Transit Corp., 1 U.S.S.B.B. 308, 310-311 (1934), where it was held that injury occurred when the inapplicable charges were paid; that the claim of the payor accrued at once and that the law does not inquire into later events, citing Southern Pacific Co. v. Darnell Taenzer Lumber Co., 245 U.S. 531 (1918), in which Justice Holmes held that "The general tendency of the law, in regard to damages at least, is not to go beyond the first step. As it does not attribute remote consequences to a defendant so it holds him liable if proximately the plaintiff has suffered a loss. The plaintiffs suffered losses to the amount of the verdict when they paid. Their claim accrued at once in the theory of the law and it does not inquire into later events. (Citation omitted.) . . . If it be said that the whole transaction is one from a business point of view, it is enough to reply that the unity in this case is not sufficient to entitle the purchaser to recover, any more than the ultimate consumer who in turn paid an increased price. He has no parity with the carrier. (Citations omitted.) The carrier ought not to be allowed to retain his illegal profit, and the only one who can take it from him is the one that alone was in relation with him, and from whom the carrier took the sum. (Citation omitted.) Behind the technical mode of statement is the consideration well emphasized by the Interstate Commerce Commission, of the endlessness and futility of the effort to follow every transaction to its ultimate result. 13 I.C.C. 680. Probably in the end the public pays the damages in most cases of compensated torts." Id. 533-534. Burgess v. Transcontinental Freight Bureau, 13 I.C.C. 668(1908), put it this way, "If complainants were obliged to follow every transaction to its ultimate result and to trace out the exact commercial effect of the freight rate paid, it would never be possible to show damages with sufficient accuracy to justify giving them." Id. 680.

In another case, also cited by Mr. Justice Holmes, Nicols, Stone & Myers Co. v. L. & N. R. Co., 14 I.C.C. 199 (1908), the I.C.C. stated that if the producer (or in the present case the mainland shipper) and the dealer (or again in the present case the consignee on Guam) had been able to increase the price of the goods sold "by the amount of the added freight charges, and it were shown to be true that no injury has therefore resulted to either of them but has fallen on the consumer, we would again be led into another field of inquiry impossible of definite and satisfactory results and this could only be regarded as undertaking to deal with indefinite and remote consequence." Id. at 208.⁽¹⁰⁾

As shown by APL, the rule of Oakland Motor has been applied to a number of situations in which a respondent carrier attempted to use a "pass-on" allegation defensively. APL also points out that the rule of Oakland Motor necessarily applies in a situation in which a complainant who is not the direct payor attempts to obtain reparations by claiming that the direct payor passed the charges on to it-precisely the situation here. Uniformly, the rule has been deemed to require rejection of reparations claims by persons who, like complainants here, claim reparations by arguing that the direct payor passed the carrier's charges on to them. In Sanrio, Inc. v. Maersk Line, 19 S.R.R. 907 (ALJ, admin. final 1979), the Commission rejected the claim that the consignee should be permitted to sue for reparations based on the theory that the carrier's charges, which had been paid by the shipper, had been passed on by the shipper to the consignee. The opinion of Judge Norman D. Kline comprehensively surveyed prior Commission law and summarized the law:

While any person may file a complaint under Section 22 of the Act alleging a violation of the Act, the law in complaint cases involving alleged overcharges . . . is that the person who paid the freight to the carrier has standing to recover reparation for injury, not a secondary party, even if the latter party ultimately bore the cost of the overcharge. Id. at 907.

The rule set forth in these cases under both the 1916 and 1984 Shipping Acts is reflected in the FMC's regulations, which require a complainant to include in its reparations statement the "name of person paying charges in the first instance." 46 C.F.R. § 502.252 (Exhibit 1) (emphasis added). GovGuam has not cited any cases or regulations to the contrary.

The long-established Commission rule concerning eligibility to seek reparations for allegedly unlawful rates has been previously recognized in fact by complainants and succinctly stated as follows:

[T]he FMC has ruled that reparations may be awarded only to shippers who have personally paid unreasonable rates, unless there has been a valid assignment from the person holding the legal right to reparations. In the absence of a valid assignment, a complainant may recover reparations only on shipments for which the complainant made direct payment." (Emphasis in original; citations omitted.)

As shown, complainants previously took the position before the federal courts that the mainland shippers had standing. In the class action litigation that complainants initiated in the D.C. Circuit to attempt to obtain trade-wide reparations based on the Commission's decision in this proceeding, GovGuam and the thee private complainants sought to certify-and to represent-a plaintiff class that included mainland shippers as well as Guam consignees. Indeed, complainants' filings with the court specifically represented that mainland shippers constituted the majority of the class on whose behalf they sought to obtain reparations.⁽¹²⁾ Complainants' present claim that the Guam consignees are the parties with standing concerning prepaid shipments, rather than the mainland shippers who actually paid APL, blatantly conflicts with their earlier position in court as to the same shippers and shipments as well as with the established case law as shown by APL and has not been shown sufficient to warrant a denial of respondents' motions.

Collect Shipments

There are 399 collect shipments. Complainants concede that they did not pay APL directly for the freight on any of the 155 collect shipments shown in Attachment ("Att.") 1 to APL's motion. APL seeks an order dismissing complainants' claims for different categories of collect shipments:

a) 301 shipments as to which there is no documentation that complainants paid the freight to APL (identified in Att. 2 to APL's motion);

b) 56 shipments for which there are check stubs but no checks showing that complainants paid the freight to APL (identified in Att. 3).

(As noted, APL agrees that complainants have submitted adequate documentation of payment of freight to APL, in the form of a canceled check to APL, for 42 of the 399 collect shipments.)

Complainants urge (Dr. Nadel's affidavit, p. 10) that the FMC should find "implicit proof of payment," i.e., find that APL's "bill of lading charges were paid by the complainant" based on a "presumption" that APL would not have provided "continuing service to the complainant" over an extended period unless it were being paid.

APL's request for dismissal of certain claims will be granted because:

(1) The record shows that for every shipment for which a complainant paid APL's tariff charges to APL, the relevant complainant had exclusive possession of the evidence that such payment was made-i.e., a canceled check payable to APL.⁽¹³⁾

(2) Complainants had document retention policies in place that required these canceled checks to be retained for at least five or seven years, respectively⁽¹⁴⁾

(3) In 1990, APL filed discovery requests seeking production of copies of all of complainants' canceled checks evidencing payments to APL.⁽¹⁵⁾ Complainants objected on the ground that discovery of proof-of-payment documentation should be deferred until a separate reparations phase.⁽¹⁶⁾

(4) Respondents moved to compel complainants to produce their canceled checks promptly. In 1991, Judge Ingolia rejected complainants' position and ordered complainants to produce all of their proof-of-payment documentation-including all of their canceled checks payable to APL-before submission of their evidentiary case on rate reasonableness:

GovGuam and the four private complainants are required to identify whether they paid the tariff charges directly to the carrier on all shipments for which reparations are to be claimed and to provide documentation establishing proof of payment for each such shipment in the form of a receipt or canceled check or any other comparable document that identifies who made the payment, as promptly as the documentation becomes available, but in no event later than the date of the submission of their direct case . . . . November 1, 1991 Procedural Order, p. 2.

(5) In response to Judge Ingolia's order, complainants produced a number of check stubs and canceled checks and represented that these were the documents "reflecting payment for shipments on APL . . . vessels, for which they claim reparations."⁽¹⁷⁾

(6) After complainants submitted their direct case in the "liability phase" in 1992, respondents moved for an order dismissing any claims for reparations for any shipments for which complainants had not produced proof-of-payment documentation as required by Judge Ingolia's 1991 order. The motion explained that complainants had "in no way indicated that the documentation they produced was anything but complete," but stated that such an order would be appropriate in order to avoid a possibility of future surprise.⁽¹⁸⁾

Complainants opposed that motion to dismiss by representing that "[a]t this time, complainants believe they have provided virtually all of the information requested by respondents."⁽¹⁹⁾ Respondents' motion to dismiss was denied stating:

GovGuam claims to have complied with [Judge Ingolia's 1991] Order and submitted the required documentation. Respondents do not point to any respect in which the documentation is incomplete or any manner in which GovGuam has failed to comply with the November 1, 1991, Order. Respondents' request for further relief at this point in the proceeding is not shown to be necessary and is denied. August 20, 1992 Order, p. 7.

It is clear that complainants' requested "presumption" that they paid APL for each of the 399 collect shipments is not shown to be warranted on the basis of the record, case law or any other factor, and cannot be granted, and that APL's motion to dismiss these claims will be granted.

Freight Forwarders

The record shows that out of the 357 collect shipments for which complainants did not produce a canceled check, 254 shipments (71 percent) involved freight forwarders, as identified in APL's Attachment 4.⁽²⁰⁾

It is commonplace in the shipping industry for a carrier to be paid by a forwarder rather than by the cargo interest itself. As pointed out by APL, the FMC's regulations specifically define "freight forwarding services" to include, inter alia, "advancing freight or other monies . . . in connection with the dispatching of shipments." 46 C.F.R. § 515.2(j). And in defining what constitutes a prohibited "beneficial interest" of a forwarder in cargo, the regulations specifically exclude from the prohibition "any obligation in favor of [a forwarder] arising solely by reason of the advance of out-of-pocket expenses incurred in dispatching a shipment." 46 C.F.R. § 515.2(b).

This recognition of the forwarder's role in making freight payments is neither new nor limited to the 1984 Act. In Port of New York Freight Forwarder Investigation, 3 U.S.M.C. 157 (1949), for example, the Commission specifically identified the advancement of freight as a forwarding activity (p. 159 n.2), and found unreasonable under the 1916 Act certain freight forwarder practices regarding the invoicing for reimbursement of such advanced freight. And in Bolton & Mitchell, Inc., 13 S.R.R. 29, 34 (FMC 1972), the Commission discussed the beneficial interest regulations under the 1916 Act, which, like today, excluded from the prohibition interests arising from the forwarder's advancement of freight payments. See also, e.g., Mitsubishi International Corp. v. N.Y.K. Line, 18 S.R.R. 426, 427 (FMC 1978); Bristol Meyers Co. v. U.S. Lines, Inc., 21 S.R.R. 349 (FMC 1981); and Williams, Clarke Co. v. Sea-Land Service, Inc., 17 S.R.R. 1684 (ALJ, adopted 1978).

When a forwarder is the entity that paid the carrier directly, Commission case law requires that the shipper or consignee, in order to seek reparations from the carrier, must prove that it reimbursed the forwarder. Complainants' evidentiary submission contains no documentation evidencing payment by any complainant to any forwarder. Complainants have admitted that they have no such payment documentation.⁽²¹⁾

As explained by APL, in short, complainants' requested "presumption" that they paid APL for all collect shipments must be rejected on its own terms because the fact on which the presumption is based-continuity of service over an extended period-suggests nothing about the identity of a person who paid the carrier, and because complainants have ignored the possibility that APL could have been paid by freight forwarders in many instances.

Complainants' request for a ruling that it should be presumed that they paid APL the freight on collect or prepaid shipments cannot be granted. The fact that a particular shipment is shown on a bill of lading as "freight collect" or "freight prepaid" does not warrant a presumption either that payment of freight was made to the carrier or that payment to the carrier was made by the consignee in the case of collect shipments or by the consignor in the instance of prepaid shipments or by any other particular person. See Snyder General Corp. v. South African Marine Corp., 25 S.R.R. 373 (I.D. admin. final 1983); Clark Equipment Co. v. Farrell Lines, 20 S.R.R. 694 (Settlement Off. 1980); International Harvester v. South African Marine Corp., 21 S.R.R. 841, 843 n.2 (I.D. Judge Kline 1982, admin. final 1982); Mine Safety Appliances Co. v. Springbrook Shipping Co., 21 S.R.R. 697; Mitsubishi International Corp. v. N.Y.K. Line, 18 S.R.R. 426, 427 (FMC 1978); Bristol Meyers Co. v. U.S. Lines, Inc., 21 S.R.R. 349, 350 (FMC 1981); and Williams, Clarke Co. v. Sea-Land Service, Inc., 17 S.R.R. 1684 (ALJ, adopted 1978).

The Commission holds that it is incumbent upon the complainant to document that the carrier was in fact paid (as well as by whom), and that, even when a complainant has submitted some payment-related documentation, a presumption will not be used to fill the evidentiary gap where the documentation is lacking in some respect that renders it less than fully probative. In Cotton Import & Export Co. v. Sea-Land Service, Inc., 20 S.R.R. 260 (FMC 1980), for example, the Commission held that, in order to obtain reparations, the complainant would need to provide copies of both the front and the back of the check, since both sides of the document are necessary to show endorsement by the carrier and payment by the bank. And the Commission further stated that, even where copies of both a front and a back may be submitted, reparations must also be denied if there is a question whether they came from the same check. Id. at 262.

Similarly, in Snyder General Corp., it was held that checks that were illegible in relevant respects-such as payee and amount-were insufficient to document payment for purposes of reparations. 23 S.R.R. 373. See also Mine Safety Appliances co., supra, 21 S.R.R. at 699 (illegible billing statements); Mine Safety Appliance Co. v. Springbok Shipping Co., 20 S.R.R. 410, 413 (Settlement Off. 1980) (documents showing that freight bill was presented for payment but not whether or when it was paid held insufficient); Refinement International Co. v. Eastbourne, 815 F. Supp. 738, 744 n.11 (S.D.N.Y. 1993) (check duplicates not showing cancellation inadequate to show payment), aff'd, 25 F.3d 105 (2d Cir. 1994); Ruberto v. Commissioner of Internal Revenue, 774 F.2d 61, 64 (2^nd Cir. 1985) (where matching of fronts and backs was unclear, claimant would need to produce original checks in order to prove payment). Thus it is clear that complainants' reparations claims must be dismissed for the collect shipments for which they have submitted no documentation, or inadequate documentation, of payment to APL.

Complainants' requested "presumption" of payment is especially unwarranted here, given their failure to retain the evidence that would render the presumption unnecessary. It is evident that complainants can only be awarded reparations where they have proof that they paid the freight or if a forwarder paid the freight and that the complainant has proof that it reimbursed the forwarder. In the complex shipping industry, in the absence of actual documentation, no one has explained how it would be possible to know whether a particular shipment was paid for by the shipper, the shipper's freight forwarder, by the consignee, by the consignee's freight forwarder, by some other party, or not at all.

Complainants seek a presumption that they paid APL for 357 collect shipments even though someone in complainants' employ failed to keep the evidence that would have established that they paid the freight to APL on those shipments and thus avoided the need for any presumption. As shown in APL's motion, it is well settled that, when a party is responsible for the loss or destruction of important evidence, an adverse inference can be drawn against that party on the issues to which the evidence would relate, and that such an adverse inference is generally appropriate when the party can reasonably be faulted for the loss or destruction. See, e.g., Testa v. Wal-Mart Stores, Inc., 144 F.3d 173, 177 (1^st Cir. 1998) (negative inference proper; "[w]e have held with some regularity that a trier may . . . infer from a party's obliteration of a document relevant to a litigated issue that the contents of the document were unfavorable to that party"); Pressy v. Patterson, 898 F.2d 1018, 1024 (5^th Cir. 1990) (negligent failure of a party to retain tapes of an interview would justify deeming certain facts reported in the press as being conclusively admitted); Cole v. Keller Industries, Inc., 132 F.3d 1044, 1047 (4^th Cir. 1998) (destruction of evidence may permit an adverse inference); Glover v. BIC Corp., 6 F.3d 1318, 1329 (9^th Cir. 1993) (adverse inference from destruction of documents); Welsh v. United States, 844 F.2d 1239, 1247 (6^th Cir. 1988) (adverse inference available against party that negligently lost evidence); Bass v. General Motors Corp., 150 F.3d 842, 850 (8^th Cir. 1998); Shamis v. Ambassador Factors Corp., 34 F. Supp. 2d 879, 888-90 (S.D.N.Y. 1999); and Hartman v. Duffey, 973 F. supp. 189, 196 (D.D.C. 1997).

A number of the courts examine the particular circumstances of the loss or destruction of evidence, and, in determining whether and to what extent an adverse inference should be drawn, they consider the degree to which the spoliating party can be faulted. In general, the courts agree that an adverse inference is appropriately drawn where the spoliating party has been significantly negligent with respect to documents or other evidence of plain relevance.

In the present proceeding, the record shows that there is fault or negligence of a type generally recognized by the courts to warrant an adverse inference given complainants' previously-described conduct in relation to the discovery requests and Judge Ingolia's production order, as well as their representations subsequently. However, APL argues that the issue here is not whether an adverse inference should be drawn against complainants. Rather, complainants seek the opposite, i.e., to reward their conduct by drawing a favorable inference-an inference allowing them to be relieved of the otherwise applicable Commission rules and to satisfy their burden of proof on an essential element of their case through a "presumption" that they paid APL for each and every one of 357 collect shipments for which they submitted no (or inadequate) documentation.

As argued by APL, it is clear that if the cases on adverse inferences mean anything, they mean, a fortiori, that it is impermissible to grant a favorable presumption to a party that lost or destroyed evidence in the circumstances here.

Without a favorable presumption that complainants have not justified, they have not filled the gap in their evidentiary case, and their reparations claims for the collect shipments for which they have not submitted payment documentation will be dismissed for failure to prove that they paid APL the unsubstantiated amounts they seek. See also Puerto Rico Freight Systems, Inc. v. R & S Trading, 27 S.R.R. 378 at 379 (ALJ 1995), where a hurricane had destroyed records that were necessary to establish that the complainant had suffered injury as a result of respondents' statutory violation and the complaint was dismissed. In the absence of evidence necessary for proof of injury, there was no alternative. See also United States v. Duffy, 378 F. Supp. 22, 24 (M.D. Pa. 1974) ("impossibility of the taxpayer to make proof [due to destruction of his records by flood] does not relieve him of his burden"); Hartman v. Duffey, 973 F. Supp. 196 (D.D.C. 1997) (where party's destruction of test results left it unable to provide reliable evidence showing that plaintiff failed the test, it did not meet its burden of proving an affirmative defense); and In re Air Crash Disaster Near Chicago, 90 F.R.D. 613, 621 (N.D. Ill. 1981) (a court will not relieve a party of the consequences of its inability to produce documents where that inability is "self-inflicted").

As Justice (then Judge) Breyer stated, it is appropriate to "plac[e] the risk of an erroneous judgment on the party that wrongfully created the risk" by destroying the evidence that would have established the matter one way or the other. Nation-Wide Check Corp. v. Forest Hills Distributors, Inc., 692 F.2d 214, 218 (1^st Cir. 1982). This statement is apt here. Here, complainants had the canceled checks at one time that would have shown whether they paid the freight to APL on any particular shipment. They allowed most of those documents to be destroyed or disappear, and so must properly bear the risk of any arguable resultant uncertainty. Beil v. Lakewood Engineering & Manufacturing Co., 15 F.3d 546, 552 (6^th Cir. 1994) (stating that where party cannot meet its burden due to the absence of destroyed documents and the resultant negative inference, summary judgment is appropriate). In the circumstances, complainants' requested presumption that they paid APL for 357 collect shipments cannot be granted.

Two shipments moved from Singapore to Guam and two from Canada to Guam. These are presumptively not subject to the 1916 Shipping Act which deals with shipments between two places in the United States (Att. 7) and must be dismissed.

The parties have agreed that no reparations apply to any shipment with a sail date prior to March 9, 1988. Complainants included 17 APL shipments in this category and some similar shipments of Sea-land and these must be dismissed.

As noted, interior point intermodal shipments, or shipments that were not port-to-port shipments have been deemed to be beyond the scope of the litigation. For example, through bills of lading from interior points (Chicago, Seattle, etc.) from which Sea-Land provided rail or truck service are not subject to the FMC's jurisdiction, either before or after Sea-Land's transition to ICC-tariffed operations in mid-1989. Similarly, shipments destined for delivery beyond Guam for final destination in Saipan are outside the scope of this proceeding. Those shipments include the following, as keyed to the item numbers in GovGuam's submission, and will be stricken:

79.  Chicago, Illinois origin shipment;

80.  Felixstowe, England origin shipment;

87.  Seattle, Washington origin shipment;

110. Chatsworth, California origin shipment;

112. New York, New York origin shipment;

123.  Chicago, Illinois origin shipment;

139.  Saipan destined shipment; and

220.  Saipan destined shipment.

Duplicate Shipments (Items 238, 243)

A review of the GovGuam materials accompanying the direct case indicates that shipments 238 and 243 are the same shipment. They evidence the same ship, voyage, port of lading, discharge, freight charges and bill of lading number and thus shipment 243 will be stricken from the reparations table on the grounds that it is duplicative of number 238.

Non-Sea-Land Shipment (No. 65)

Shipment 65 identifies the carrying vessel as the President Garfield, but this vessel is not shown to be a vessel of either respondent, and GovGuam is obviously not entitled to an award of reparations from either respondent for a shipment made on another carrier's vessel, and shipment 65 will be stricken.

Other (Items 226, 258, 263)

Shipment 226 identifies the shipment of a container of canned meats from Oakland to Guam. The GovGuam reparations statement asserts that the ocean freight charges for the shipment were $7,042.00. According to the invoice between the shipper and the consignee, that amount represented the FOB price from the shipper for the canned meats, not the applicable ocean freight charges. The bill of lading in Sea-Land's possession does not provide reference to an amount due for freight charges. The shipper's invoice, however, references an ocean freight charge of $238.40.

GovGuam's direct case on this submission is thus facially deficient and does not show that it paid to Sea-Land an amount constituting reparations for alleged overcharges, and shipment 226 will be stricken.

Shipment 258 identifies a shipment in the name of "JONGUER." This entity is not shown to be relevant to this proceeding, and this shipment will be dismissed.

Shipment 263 does not provide evidence of the bill of lading number for which reparation is sought. GovGuam has not provided sufficient information to identify the shipment and for failure to carry its burden of proof, this particular shipment will be stricken. GovGuam has not interposed any objection to dismissing the claims of any of the foregoing shipments.

Historically, the Commission has been liberal in its view of standing to bring complaints under section 22 of the 1916 act, 46 U.S.C. app. § 821. Rule 1 of the Commission's Rules of Practice and Procedure provides that the rules "will be construed to secure the just, speedy, and inexpensive determination of every proceeding." 46 C.F.R. § 502.1.

Of the 262 shipments, 61 were marked "freight prepaid" with freight charges paid to Sea-Land prior to delivery to complainants. As explained by Sea-Land, it is commonly understood that a freight-prepaid bill of lading means that the shipper must pay the freight charges within a prescribed period after the bill of lading is issued. In effect, with freight prepaid bills of lading, short-term credit is extended to the freight forwarder. Alltransport, Inc. v. Costa Line Cargo Services, Inc., 1986 AMC 2445 (S.D.N.Y. 1986). In the context of the U.S.-Guam trade, payments for freight-prepaid shipments are made directly to the carrier by the shipper or forwarder in the United States. The carrier does not receive payment of freight charges directly from the consignee (e.g., named complainants). The transaction between the complainants here and the shippers of record (who are not parties to this case) is a merchant/purchaser relationship in which the ocean transport element is incidental to an exchange of merchandise.

Bills of lading are marked "freight prepaid" where payment of freight charges are to be made at the point or port of origin of the cargo. Payment is made to the carrier either by the shipper or by a freight forwarder. Payments of "freight collect" charges, on the other hand, are almost invariably made at the point or port of destination of the cargo. Payment to the carrier is typically made by the consignee, a freight forwarder, or a customs broker. See National Shipping Co. of Saudi Arabia v. Omni Lines, Inc., 1997 AMC 1708 (11^th Cir. 1997). See also Maersk Inc. v. Alan Marketing, Inc., 199 AMC 278 (S.D.N.Y. 1998). In regard to these 61 shipments, GovGuam has not produced any documentation showing that either GovGuam or any of the private complainants paid the applicable freight to Sea-Land directly.

It is well-established that parties who do not have proof that they paid the applicable freight cannot recover reparations unless they present a valid assignment of claim from the paying party. This is not a new holding. One early leading case nearly seven decades ago is, as noted earlier, Oakland Motor Car Co. of Duluth, Minn. v. Great Lakes Transit Corp., 1 U.S.S.B.B. 308, 310 (1934).

This should not have come as a surprise to complainants. In Government of Guam v. Pacific Far East Line, inc. and American President Lines, Ltd., 7 S.R.R. 167 (1966), the Presiding Officer, John Marshall, stated that GovGuam asks the Commission "to award reparation to the people of Guam in the form of a fund to be paid into the custody of the Government of Guam to be distributed to the consignees of ocean freight at Guam during the period in which the unlawful tariffs have been in effect, such distribution to be in proportion to the commodities received by the consignees during the period. . . . The award of reparation under Section 22 is limited to parties having legal claims for damages, i.e., shippers, consignees, persons paying the freight charges or holders of valid assignments. Guam has such standing only as to its own shipments." Complainants have not shown that, in the intervening 36 years, anything has changed to warrant a different conclusion today.

During the course of discovery GovGuam produced a number of canceled checks relating to freight prepaid shipments. None of those checks was made payable to Sea-Land. Rather, those checks were made payable by the named complainants to mainland shippers. Accompanying some of those checks were invoices running between the shipper and a named complainant. In a few instances the invoices contained a line item indicating the specific freight amount paid by the U.S.-based shipper to Sea-Land. The FMC has held that invoicing such as that does not entitle a non freight-paying consignee to reparations. See Corning Glass Works v. Froth Amazonia, S.A., 25 S.R.R. 1055 (Decision of Settlement Officer, July 19, 1990). ("Of course, a consignee might succeed to a claim by means of valid assignment. Barring such assignment, standing for an award of reparations must remain with the payer of freight charges."). Id. at 1057, fn10.⁽²²⁾

It is also well-established that it was the non-party who paid the charges who was injured by the unreasonable rate, and that injury accrued when the non-party remitted the freight to the carrier. Thus the subsequent payment of an invoice does not vest a right of reparations in the consignee unless it has a valid assignment of the claim. See Mr. Justice Holmes' explanation in Southern Pacific Co. v. Darnell-Taenzer Lumber Co., 245 U.S. 531 (1918), noted earlier.

GovGuam has not provided any proof that it paid Sea-Land directly (or indirectly through a reimbursed freight forwarder) for any of the 61 prepaid shipments and GovGuam has acknowledged that it does not have any valid assignments of claims from any U.S.-based shipper. Thus, the 61 prepaid shipments will also be stricken.

GovGuam has identified 201 shipments marked "freight collect."⁽²³⁾ As to these shipments, it is also well-established that the non-freight paying shipper is not entitled to an award of reparations unless it has a valid assignment of claims from a proper party. See Colgate Palmolive Co. v. Grace Line, Inc., 11 S.R.R. 982 (I.D. 1970) (shipper not having an interest in the payment of collect charges is not the proper party to file a claim for reparations).

As to freight collect shipments for which GovGuam had produced a canceled check from the named complainant payable to Sea-land, Sea-Land acknowledged that the named complainants had paid Sea-Land ocean freight charges. GovGuam has produced five such canceled checks evidencing payment of freight charges directly to Sea-Land by a named complainant. With the exception of those five shipments, GovGuam has not established that the named complainants paid ocean freight charges directly to sea-Land. GovGuam has not produced any evidence indicating that the named complainants reimbursed freight forwarders or intermediaries for any shipments for which these parties paid Sea-Land the ocean freight charges. This absence of proof bars any other recovery of reparations by the complainants.

Finally, it should be pointed out that in Mar-Mol Co. and CopyCorp. v. Sea-Land Service, Inc., 27 S.R.R. 1085 (1997), the Commission found that Mar-Mol was injured by paying Sea-Land an unreasonable tax. Mar-Mol sought an "order of general restitution" as a means of reimbursing all shippers charged a license tax in Puerto Rico.

The Commission held (1) that the FMC does not have "the authority to impose whatever equitable remedy it feels is appropriate, regardless of statutory constraints"; (2) that "the Act authorizes an award of reparations only to complainants, not to non-parties"; (3A) that, "had it chosen to do so, Mar-Mol could have brought a class-action before the Commission," citing Government of Guam v. American President Lines, 28 F.3d 142, 148 n.8 [26 S.R.R. 448] (D.C. Cir. 1994); and (4) "It is not appropriate at this final stage of this proceeding to change the nature of the case and let it become a de facto class action. Id. 1089-1090. In the circumstances, complainants' request for equitable relief clearly cannot be granted.

In its reply, GovGuam pleads:

The most important issue that Complainants wish to convey to the Federal Maritime Commission (FMC) at this time is the need for prompt disposition of this case. This proceeding has been litigated for over a decade costing all parties an inordinate amount of resources. This matter needs to come to a conclusion. Page 1.

Complainants agree with Sea-Land that the number of specific shipments at issue in the reparations phase of this proceeding is relatively trivial. It is why complainants have for several years sought to settle this phase of the proceeding. Page 5.

Respondents also evince a desire to settle this proceeding. Moreover, all the parties indicate that judicial relief will be sought.

In view of the foregoing, it is strongly urged that we have reached that juncture where the parties must give serious consideration to reaching a compromise settlement of the remainder of this proceeding, realizing "the litigative probabilities" and the continued drain of resources by all parties which should be more advantageously directed to other avenues. In this regard counsel are directed to convey to their respective clients the earnest desire of the Commission that this proceeding be brought to a close as soon as possible.

The parties are also reminded that the services of Mr. Ronald D. Murphy, a skilled mediator and the Alternative Dispute Resolution specialist of the Commission's Bureau of Consumer Complaints and Licensing, is available to aid in seeking the means to conclude this investigation now. See 66 Fed. Reg. 43, 511. His service have been successfully employed in numerous proceedings, for example, Docket No. 99-24, Cargo One, Inc. v. Cosco Container Lines Company, Ltd., Order directing Parties to Consult ADR Specialist, served September 20, 2001; Settlement served February 19, 2002; Kogan v. World Express Shipping, Transportation and Forwarding SVCS., Inc., Settlement Approved, Complaint Dismissed with Prejudice, 29 S.R.R. 68 (ALJ 2000), administratively final, January 17, 2001; and Docket No. 00-02, Crowley Liner Services, Inc. and Trailer Bridge, Inc. v. Puerto Rico Ports Authority, ruling entitled, Notice of Amendment to Previous Rulings, served October 2, 2001 (respondent directed to speak with ADR Specialist Murphy, page 3), now pending settlement.

To determine the results of the foregoing and the parties' intentions in the matter, this proceeding is designated for an informal conference on Tuesday, April 9, 2002, at 10:00 a.m., in Room 1034 (the Commissioners' Conference Room), 800 North Capitol Street, N.W., Washington, D.C.

IT IS ORDERED:

Respondents' motions for summary disposition are granted and, in order to expedite matters, respondents are directed to prepare draft appropriate orders carrying out the findings in this ruling as to the dismissal of claims and submit them as soon as possible for use in preparing orders for service.

Frederick M. Dolan, Jr.
Administrative Law Judges

ENDNOTES

1. Respondent Sea-Land Service, Inc. filed a similar motion and generally supports the position of APL, infra.

2. The complainants are the Government of the Territory of Guam ("GovGuam"), Town House Company, Inc. ("Townhouse"), Micronesian Brokers Incorporated ("MBI"), and Pacific International Company, Inc. ("PIC"). Townhouse, MBE and PIC are referred to as the "three private complainants."

3. March 9, 1988, is the date two years prior to the effective date of the amendment to the complaint that added the three private complainants as parties.

4. APL cites the affidavit of GovGuam's expert witness, Dr. Ernest Nadel, at p. 8, and states that for 50 of the 155 prepaid APL shipments, complainants' evidentiary submission includes an invoice that allegedly evidences that the freight charge was passed through to the consignee/complainant and that complainants have submitted no such document for the other 105 prepaid shipments.

5. APL points out that complainants have admitted that they had possession of all canceled checks evidencing such payments (see their December 6, 2001 response to APL discovery request 12).

6. APL shows that complainants' December 6, 2001 response to APL discovery request no. 5 admits that the bills of lading they submitted identify the shipments in which a freight forwarder was involved, and that each of the complainants previously acknowledged that it used freight forwarders for some shipments.

7. Nadel Table 1-APL, Worksheet 1.

8. APL points to complainants' December 6, 2001 Response to APL Discovery Request No. 24 & attached Stipulations. (March 9, 1988 is the date two years prior to the effective date of the amendment to the complaint that added the three private complainants as parties. The statute of limitations for reparations claims under the Shipping Act, 1916, was two years.)

9. Borja (PIC/Gibsons) Written Direct ¶¶ 7-8; Camacho (PIC/Pacific Wholesalers) Written Direct ¶¶ 10-11; King (MBI) Written Direct ¶ 12; McComas (Townhouse) Written Direct ¶¶ 10-11.

10. The FMC has recognized that shippers and consignees may have private contractual avenues for pursuing a potential adjustment of their accounts based on a reparations award to one of them, but that those contractual issues are outside the Shipping Act.

11. Brief for appellants in D.C. Cir. Docket No. 93-7023 (April 11, 1994), p. 30. Complainants' class action lawsuit was dismissed for failure to state a federal cause of action. Government of Guam v. American President Lines, 809 F. Supp. 150 (D.D.C. 1993), affirmed 28 F.3d 142 (D.C. Cir 1994).

12. Plaintiffs' October 15, 1992 Memorandum on the Application of the Statute of Limitations in D.D.C. No.  92-0622, p. 6, n.1.

13. Complainants have admitted that they had possession of all canceled checks evidencing such payments (see their December 6, 2001Response to APL Discovery Request 12).

14. Townhouse and MBI had a written policy requiring that "canceled checks and bank statements" be retained for seven years. See Complainants' December 6, 2001 Response to APL Discovery Requests Nos. 14, 16 & 20. MBI's Vice President David King testified upon deposition that MBI maintained documentation that would identify when MBI paid the carrier's freight charges, including "[p]ayment records in accounting" and specifically including "canceled checks." David King Dep. p. 61. PIC had an unwritten policy that canceled checks were retained for five years. Complainants' December 6, 2001 Response to APL Discovery Request No. 14.

15. The discovery requests sought "[f]or each shipment for which You claim reparations, . . .whether You (as opposed to . . . any other person) paid the tariff charges for the shipment directly to the carrier, and if so produce a receipt or cancelled check showing such payment." Respondents' Second Set of Joint Discovery Requests to GovGuam, Interrogatory 11 (served December 21, 1990); Respondents' Second Set of Joint Discovery Requests to each of the private complainants, Interrogatory 1 (incorporating Interrogatory 11 to GovGuam) (served December 21, 1990).

16. July 29, 1991 letter from complainants' counsel to respondents' counsel, pp. 4 (re GovGuam) and 15 (re the private complainants). The relevant portions of this letter may be found as Attachment 9 to APL's May 10, 1999 Opposition to Complainants' Motion to Compel.

17. Supplemental Answers to Respondents' Second Set of Joint discovery requests to each of the private complainants, Interrogatory 1 (incorporating GovGuam Interrogatory 11) (March 30, 1992). See also Supplemental Answers to Interrogatory 11 (March 18, 1992) (PIC); Supplemental Answers to Interrogatory 11 (May 8, 1992) (GovGuam).

18. Respondents' May 5, 1992 Motion to Dismiss, pp. 25-28.

19. Complainants' July 21, 1992 Reply, pp. 55-56 n. 35.

20. Complainants' December 6, 2001 response to APL Discovery Request No. 5 admits that the bills of lading they submitted identify the shipments in which a freight forwarder was involved and that each of the complainants previously acknowledged that it used freight forwarders for some shipments.

21. Complainants' December 6, 2001 Response to APL Discovery Request No. 5.

22. See also footnote 10 on page 20 hereof.

23. Numbers 8-186, 246-250, 252-259, 261-266, 269-271.