Trends In International Litigation : International Business Lawyer & Attorney : Ed Joffe : Joffe & Joffe Law Firm : Miami, Florida Global Customs & Trade Issues

The ongoing saga continues in the investigation of the worldwide criminal conspiracy by airlines  to fix prices in the air freight business. Northwest Airlines LLC Agrees to Plead Guilty for Fixing Prices on Air Cargo Shipments.

The Justice Department announced this afternoon that  Northwest Airlines LLC has agreed to plead guilty and to pay a $38 million criminal fine for its role, through Northwest Airlines Cargo, in a conspiracy to fix prices in the air transportation industry.

According to a one-count felony charge filed today in U.S. District Court for the District of Columbia, Northwest Airlines Cargo, which is no longer in operation, engaged in a conspiracy to fix the cargo rates charged to customers in the United States and elsewhere for international air cargo shipments from at least July 2004 until at least February 2006.  During the time period covered by the felony charge, Northwest Airlines Cargo earned more than $80 million from its air cargo services between the United States and Japan.
 

Northwest Airlines LLC is charged with price fixing in violation of the Sherman Act, which carries a maximum fine of $100 million for corporations. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
 

Including today’s charge, as a result of this investigation, a total of 16 airlines have pleaded guilty or have agreed to plead guilty in the Justice Department’s ongoing investigation into price fixing in the air transportation industry. To date, more than $1.6 billion in criminal fines have been imposed

The airlines that have pleaded guilty as a result of the department’s ongoing investigation into the air transportation industry are: British Airways Plc, Korean Air Lines Co. Ltd., Qantas Airways Limited, Japan Airlines International Co. Ltd., Martinair Holland N.V., Cathay Pacific Airways Limited, SAS Cargo Group A/S, Société Air France, Koninklijke Luchtvaart Maatschappij N.V. (KLM Royal Dutch Airlines), EL AL Israel Airlines Ltd., LAN Cargo S.A., Aerolinhas Brasileiras S.A., Cargolux Airlines International S.A., Nippon Cargo Airlines Co. Ltd. and Asiana Airlines Inc.

The civil litigation is moving more slowly in the US District Court for the Eastern District of New York.  The class action settlement with Lufthansa still awaits final review on appeal. We announced in this blog on July 12 that  Air France, KLM and Martinair have entered into an agreement to settle damage claims brought against them. 

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Earlier this week the European Commission publicly annouced that it had decided to initiate formal antitrust investigations against IBM Corporation in two separate cases of alleged infringements of EU antitrust rules related to the abuse of a dominant market position (Article 102 TFEU).

Both cases are related to IBM's conduct on the market for mainframe computers. The first case follows complaints by emulator software vendors T3 and Turbo Hercules, and focuses on IBM's alleged tying of mainframe hardware to its mainframe operating system. The second is an investigation begun on the Commission's own initiative of IBM's alleged discriminatory behaviour towards competing suppliers of mainframe maintenance services.

The EU estimates that in  2009 approximately € 8.5 billion worldwide and € 3 billion in the European Economic Area were spent on new mainframe hardware and operating systems.

IBM is alleged to have engaged in illegal tying of its mainframe hardware products to its dominant mainframe operating system. The complaints contend that the tying shuts out providers of emulation technology which could enable the users to run critical applications on non-IBM hardware.

In addition, the Commission has concerns that IBM may have engaged in anti-competitive practices with a view to foreclosing the market for maintenance services (i.e. keeping potential competitors out of the market), in particular by restricting or delaying access to spare parts for which IBM is the only source.

The initiation of proceedings does not imply that the Commission has proof of infringements. It only signifies that the Commission will further investigate the cases as a matter of priority.

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The British Telegraph announced today that a law student falsely named as a pedophile on Facebook has won a £10,000 libel damages payout at the High Court.  

Chef, Jeremiah Barber, 24, posted child porn on the Facebook page of student, Raymond Bryce, along with the comment: "Ray, you like kids and you are gay so I bet you love this picture, Ha ha."   Barber, who had fallen out with Mr Bryce over an £80 debt, removed the post, made on 23 November 2008, within 24 hours.

Mr Bryce said there had been 11 links to the post, 2 comments from viewers, and more than 800 people would have been able to view the material But he later pleaded guilty to making and distributing an indecent image of a child at Stafford Crown Court and was ordered to carry out 150 hours unpaid work and handed a £1,200 costs bill.

Mr Justice Tugendhat, sitting at London's High Court, has awarded Mr. Bryce £10,000 in libel damages for the stress he endured, including anxiety that hundreds of people in his local area may have seen the post.

Mr Bryce, 24, who lives with his parents in Stone, Staffs, suffers from high functioning Asperger's Syndrome, but has secured a place on a full time degree course studying law at Stafford University. The dispute between him and Barber, from Stafford, arose after Mr Bryce lent his former pal £80 and he failed to pay it back, said the judge. Mr Bryce's efforts to secure repayment included obtaining a County Court order.  Judgment was entered for Mr Bryce in the libel case in November last year but he had to return to the High Court for an assessment of his damages.

In the witness box, Mr Bryce said:

Jeremy Barber put a defamatory blog (sic) on Facebook and made me appear to be a pedophile with homosexual tendencies, neither of which is true. He did so with intention and malice. When I viewed the pictures I was shocked because they were repulsive and disgusting and in no way reflected my attitude to life. I asked for an apology which I have not to this date received. The whole thing has been distressing, not only for myself but for my family.

Mr Bryce said there had been 11 links to the post, 2 comments from viewers, and more than 800 people would have been able to view the material.

Mr Justice Tugendhat said: "This was not only defamatory, but a defamation which goes to a central aspect of Mr Bryce's private life as well as his public reputation.

This post was deeply offensive to him, but also a cause for alarm. He could not go out in public because he feared he would be a victim of violence, which is not infrequently the result for those accused of pedophilia. It is well known that people accused of being pedophiles may be subjected to serious violence, even when there is no basis for the accusation. I can infer that the number of people who saw this Facebook page would have been in the hundreds. "This post was clearly a malicious act and the defendant has done nothing to express any regret. "Damages in libel actions are awarded as compensation, not as punishment, to vindicate reputation, to compensate for harm to that reputation and as compensation for injury to feelings.

"I assess the damages in this case at £10,000," the judge concluded, also imposing an injunction banning Barber from repeating the libel.
 

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When a foreign cargo vessel enters this country, may the cabins of its crew members be searched for contraband without reasonable suspicion?

On April 16, 2008, the MV RIO MIAMI, a foreign cargo ship, docked at the Antillean Marine inside Miami, Florida after traveling from the Dominican Republic. The Antillean Marine is located approximately three miles inland on the Miami River. Soon after arrival, officials with United States Customs and Border Protection went on board the ship to inspect the  ship for prohibited agricultural materials. The Team met with the captain of the RIO MIAMI and told him that they would be inspecting the ship from bow to stern.  After the Team inspected the bridge, Specialist Meyer and Officer Quiñones went below to inspect the crew members' cabins. The captain, who was with them, had a master key that unlocked the cabins, which were arranged like hotel rooms-one right beside another. The captain went from cabin to cabin, unlocking and opening each door so that the cabins could be searched. The master key would not open the cabin of Hilario Alfaro-Moncada, a citizen of El Salvador, who was the ship's cook. While Specialist Meyer and Officer Quiñones waited in the hall, the captain went and got Alfaro-Moncada who unlocked his cabin door with his key and opened it. Specialist Meyer asked Alfaro-Moncada if the cabin was his, if he owned everything in it, and if Meyer could inspect it. After Alfaro-Moncada answered “yes” to all three questions, Meyer entered the cabin and began inspecting it.

Specialist Meyer discovered a DVD containing child pornography in a desk drawer. Alfaro-Moncada was charged with possession of child pornography, in violation of 18 U.S.C. § 2252(a)(4)(B). Two weeks after being indicted, he filed a motion to suppress the DVDs and his statements about them, contending that the search of his cabin had violated his Fourth Amendment rights. After conducting an evidentiary hearing, a magistrate judge reported that the search of Alfaro-Moncada's cabin was a routine border search requiring no level of suspicion and recommended that the suppression motion be denied. The district court adopted the magistrate judge's report and recommendation and denied the motion.The appellate court agreed and noted that this case was more difficult since the search was of living quarters on a vessel.

At the border a search without reasonable suspicion of a crew member's living quarters on a foreign cargo vessel that is entering this country is not unreasonable for Fourth Amendment purposes.  [U.S. v. Alfaro-Moncada 607 F.3d 720 (11th Cir. 2010)]
The court makes a point of explaining that the defendant allowed the inspection. Would the court have ruled differently if consent  had not been given?
 

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On July 12, 2010, Judge Daniel R. Dominguezgranted certification of the settlement class and granted preliminary approval to the settlement agreements with the Crowley  and Horizon Defendants in the Puerto Rican Cabotage Antitrust Litigation, MDL Docket No. 3:08 md-1960(DRD).  The final fairness hearing is set for October 26, 2010. The only remaining defendants are the Sea Star Defendants.  

Counsel for the Plaintiffs' Class is Hollis L. Salzman of Labaton Sucharow.

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Air France, KLM and Martinair have entered into an agreement to settle damage claims brought against them in the United States alleging violations of the antitrust laws in connection with air cargo shipping services.

Under the terms of the settlement agreement, which is subject to court approval, the carriers will pay a total of $87 million in exchange for a release from all claims by direct purchasers of air cargo shipping services to and from the United States between 2000 and 2006. This amount will be deducted from the provision posted in 2008.

The civil actions, which have been brought as class actions and consolidated in the United States District Court for the Eastern District of New York, were initially filed in 2006 after the U.S. Department of Justice and the European Commission initiated investigations of the air cargo industry.

In 2008, the three carriers entered into plea agreements in the United States to resolve that investigation. The investigation by the EU Commission remains pending.
 

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From 1980 to 1986 petitioner Mohamed Ali Samantar was the First Vice President and Minister of Defense of Somalia, and from 1987 to 1990 he served as its Prime Minister. Respondents are natives of Somalia who allege that they, or members of their families, were the victims of torture and extrajudicial killings during those years. They seek damages from petitioner based on his alleged authorization of those acts.

The narrow question before the Supreme Court was whether the Foreign Sovereign Immunities Act of 1976 (FSIA), 28 U.S.C. §§ 1330, 1602 et seq., provides petitioner with immunity from suit based on actions taken in his official capacity. The High Court found that it does not.

The opinion noted, however, that the suit may still be barred by foreign sovereign immunity under the common law. Also even when a plaintiff names only a foreign official, it may be the case that the foreign state itself, its political subdivision, or an agency or instrumentality is a required party, because that party has “an interest relating to the subject of the action” and “disposing of the action in the person's absence may ... as a practical matter impair or impede the person's ability to protect the interest.” Fed. Rule Civ. Proc. 19(a)(1)(B). If this is the case, and the entity is immune from suit under the FSIA, the district court may have to dismiss the suit, regardless of whether the official is immune or not under the common law.

Finally, a plaintiff seeking to sue a foreign official will not be able to rely on the Act's service of process and jurisdictional provisions. Thus, a plaintiff will have to establish that the district court has personal jurisdiction over an official without the benefit of the FSIA provision that makes personal jurisdiction over a foreign state automatic when an exception to immunity applies and service of process has been accomplished in accordance with 28 U.S.C. § 1608.

[Samantar v. Yousuf, __ US __, 130 S. Ct. 2278 (2010)]
 

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On July 8, 2010, the Second Circuit Court of Appeals   ruled that new regulations for the importation of unmanufactured wood packaging material into the United States complied with the National Environmental Policy Act and the Plant Protection Act. The final rule required that all solid wood packaging material (“SWPM”) be either heat treated to a minimum wood core temperature of 56°C for a minimum of 30 minutes or fumigated with methyl bromide prior to being used in connection with the importation of goods into the United States.

The Natural Resources Defense Council, Inc. (NRDC") and the States of California, Connecticut, and Illinois had argued that the new rule did not comply with the National Environmental Policy Act ("NEPA"), 42 U.S.C. § 4321 et seq., or  the Plant Protection Act (PPA"), 7 U.S.C. § 7701 et seq. 

Plaintiffs claimed that U.S. Department of Agriculture, through the Animal and Plant Health Inspection Service (“APHIS”) violated the NEPA and the PPA by failing to fully consider the reasonable alternative of a phased-in substitute materials requirement before adopting a final rule requiring that all SWPM be either heat treated or fumigated with methyl bromide prior to being used in the transport of goods into the United States.

The Court took note

of the significant environmental threat presented by plant pests and pathogens introduced into the United States through the importation of solid wood packaging material, including pallets, crates, boxes, cases, and skids-used to support, protect, and carry commodities entering the country. Exotic wood-boring insects that accompany SWPM, such as the pine shoot beetle, the Asian long horned beetle, and the emerald ash borer, undisputedly pose a threat to U.S. agriculture and ecotourism, and to natural, cultivated, and urban forests. While the environmental impact of these destructive insects is real, the United States cannot address this global threat alone, and the U.S. Department of Agriculture, through the Animal and Plant Health Inspection Service ("APHIS"), was required to balance environmental considerations, international guidelines, and global trade concerns in adopting a final rule for the importation of SWPM.

 
The Court concluded that the Government considered all reasonable alternatives to the proposed rule, and did not act arbitrarily or capriciously in adopting a rule providing for either heat treatment or fumigation with methyl bromide of the wood material prior to importation. Accordingly, it affirmed the District Court’s decision upholding the regulations.

[Natural Resources Defense Council, Inc. v. U.S. Dep't of Agriculture 09-2021-cv]
 

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