FMC Compromise Agreements

Wednesday, November 26, 2008

On Nov. 24 the Federal Maritime Commission summarized compromise agreements reached with various ocean transportation intermediaries with respect to alleged violations of the Shipping Act of 1984.

Civil penalties in the amount of $242,500 were recovered. The agreements were reached with licensed and unlicensed ocean transportation intermediaries ("OTIs"), both non-vessel-operating common carriers ("NVOCCs") and ocean freight forwarders. The compromise agreements are:

Caribbean Freight Systems Inc.
Caribbean Freight Systems Inc. ("Caribbean Freight") is a licensed OTI located in Miami, Florida.  It was alleged that Caribbean Freight obtained and allowed others to obtain ocean transportation for property at less than the rates and charges that would otherwise be applicable by allowing non-signatories to access its service contracts in violation of sections 10(a)(1) and 10(b)(1) of the Shipping Act of 1984 ("1984 Act").  Also, Caribbean Freight allegedly violated section 10(b)(2)(A) of the 1984 Act by providing transportation in the liner trade that was not in accordance with the rates and charges set forth in Caribbean Freight's published tariff.  In compromise of civil penalties arising from these allegations, Caribbean Freight paid $30,000.

Curiel International Logistics, LLC
Curiel International Logistics, LLC ("Curiel") is a licensed OTI located in Rahway, New Jersey.  It was alleged that, prior to licensing, Curiel violated sections 8(a) and 19 of the 1984 Act by operating as an NVOCC without publishing a tariff, obtaining a license, and furnishing the requisite proof of financial responsibility.  In compromise of civil penalties arising from these allegations, Curiel paid $20,000.
 
Double Ace Cargo, Inc.
Double Ace Cargo, Inc. ("Double Ace"), a licensed NVOCC located in Medley, Florida, allegedly accepted cargo from unbonded and untariffed entities in violation of section 10(b)(11) of the 1984 Act.  Double Ace also allegedly provided service that was not in accordance with the rates, charges, classifications, rules and practices contained in its published tariff in violation of section 10(b)(2)(A) of the 1984 Act.  In compromise of civil penalties arising from these allegations, Double Ace paid $32,500. 

M Star Logistics Corporation and Wanda Shipping Company, Ltd.
M Star Logistics Corporation (""M Star"") and Wanda Shipping Company, Ltd. (""Wanda"") were unlicensed OTIs located in Los Angeles, California.  It was alleged that both M Star and Wanda violated sections 8(a) and 19 of the 1984 Act by operating as NVOCCs without publishing tariffs, obtaining licenses, and furnishing the requisite proof of financial responsibility.  During the same time period, M Star allegedly obtained ocean transportation for property at less than the rates that would otherwise be applicable in violation of section 10(a)(1) of the 1984 Act by accessing service contracts to which it was not a signatory and through the unlawful use of carrier provisions for equipment substitution.  Wanda likewise allegedly violated section 10(a)(1) of the 1984 Act by entering into a series of service contracts wherein it falsely certified its status as a tariffed and bonded NVOCC.  In compromise of civil penalties arising from these allegations, M Star and Wanda admitted to the aforementioned violations and paid $60,000.
 
Oriental Air Transport (Chicago) Inc.
Oriental Air Transport (Chicago) Inc. ("Oriental Air") is a licensed OTI located in Bensenville, Illinois.  It was alleged that, prior to licensing, Oriental Air violated sections 8(a) and 19 of the 1984 Act by operating as an NVOCC without publishing a tariff, obtaining a license, and furnishing the requisite proof of financial responsibility.  During the same time period, Oriental Air allegedly obtained ocean transportation for property at less than the rates that would otherwise be applicable in violation of section 10(a)(1) of the 1984 Act by accessing service contracts to which it was neither a signatory nor a lawful affiliate.  In compromise of civil penalties arising from these allegations, Oriental Air paid $20,000.
 
Pudong Trans USA, Inc.
Pudong Trans USA, Inc. ("Pudong") is a licensed OTI located in El Monte, California.  It was alleged that Pudong obtained ocean transportation for property at less than the rates that would otherwise be applicable in violation of section 10(a)(1) of the 1984 Act by accessing service contracts to which it was neither a signatory nor a lawful affiliate, by improperly describing the commodities shipped, and through the unlawful use of carrier provisions for equipment substitution. In compromise of civil penalties arising from these allegations, Pudong paid $60,000.
 
Sunway Logistics (USA) Inc.
Sunway Logistics (USA) Inc. ("Sunway"), a licensed OTI located in Alhambra, California, allegedly violated section 10(a)(1) of the 1984 Act by obtaining ocean transportation for property at less than the rates that would otherwise be applicable by accessing service contracts to which it was neither a signatory nor a lawful affiliate.  During the same time period, Sunway allegedly violated section 10(b)(2)(A) of the 1984 Act by providing transportation in the liner trade that was not in accordance with the rates and charges set forth in Sunway's published tariff.  In compromise of civil penalties arising from these allegations, Sunway paid $20,000.
 
In concluding the above compromise agreements, unless otherwise indicated, the parties did not admit any violations of the Act or the Commission's regulations.  The compromise agreements resulted from investigations conducted by the Commission's Area Representatives located in Los Angeles, New York, South Florida, and Washington, D.C.  Staff attorneys with the Bureau of Enforcement negotiated the compromise agreements.

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