Cleary Gottlieb helped secure a dismissal with prejudice of antitrust class actions brought by direct and indirect purchasers of ocean vehicle carrier services against clients Kawasaki Kisen Kaisha, Ltd. and its subsidiary “K” Line America, Inc., along with other ocean shipping company defendants.
On August 28, 2015, the U.S. District Court for the District of New Jersey dismissed all claims in the cases with prejudice, and on January 18, 2017, the U.S. Court of Appeals for the Third Circuit affirmed the District Court’s dismissal of all claims.
The dismissal of all claims—as affirmed by the Third Circuit—is particularly noteworthy because the class actions followed on guilty pleas by certain of the defendants in settlements with the U.S. Department of Justice. Based on these guilty pleas and related investigations by foreign antitrust authorities, the plaintiffs asserted a conspiracy among ocean vehicle carriers to increase prices, allocate customers and routes, and restrict capacity.
Oral arguments before the Third Circuit were held on November 17, 2016. At the Third Circuit oral argument, Cleary partner Mark W. Nelson argued the direct purchaser case on behalf of “K” Line and the other ocean shipping company defendants. In its ruling, the Third Circuit dismissed the direct purchaser plaintiffs’ Clayton Act claims for damages (and the indirect purchaser plaintiffs’ Clayton Act claims for injunctive relief) as barred by the Shipping Act of 1984, holding that the challenged conduct was prohibited by the Shipping Act and thus exempted from private actions under the Clayton Act.
The Third Circuit also affirmed the District Court’s dismissal of the indirect purchaser plaintiffs’ state antitrust, consumer protection and unjust enrichment claims as preempted by the Shipping Act under the doctrine of conflict preemption. The Third Circuit explained that although the Shipping Act is silent as to state law claims, the act impliedly preempts the state law claims because such claims would pose an obstacle to achieving Congress’s objectives in passing the Shipping Act.