International Shipping Fought the Law & the Law Won
However, the temptation of financial profit that can be made illegally has caused some not to heed the Clash’s warning.
Today’s blog features two stories of people or companies in the international shipping supply chain that circumvented the law for profit.
Eventually, and probably inevitably, the law won.
K-Line Executive Guilty of Price Fixing
Shipping companies, specifically carriers, have been under investigation for some time for collusion and price fixing. Now someone is going to jail for it.
We first blogged on international shipping price fixing investigations back in 2013 with:
eNews Park Forest reported on Friday that an executive of Kawasaki Kisen Kaisha Ltd. (K-Line) pleaded guilty for his involvement in a price fixing conspiracy.
Hiroshige Tanioka was sentenced to 18 months in a U.S. prison and to pay a $20,000 criminal fine.
Here’s a blurb from the eNews Park Forest story:
According to the one-count felony charge filed today in U.S. District Court for the District of Maryland in Baltimore, Hiroshige Tanioka, who was at various times an assistant manager, team leader and general manager in K-Line’s car carrier division, conspired to allocate customers and routes, rig bids and fix prices for the sale of international ocean shipments of roll-on, roll-off cargo to and from the United States and elsewhere, including the Port of Baltimore. Tanioka participated in the conspiracy from at least as early as April 1998 until at least April 2012.
“For more than a decade this conspiracy has raised the cost of importing cars and trucks into the United States,” said Assistant Attorney General Bill Baer for the Department of Justice’s Antitrust Division. “Today’s sentencing is a first step in our continuing efforts to ensure that the executives responsible for this misconduct are held accountable.”
Today’s sentence was the first to be imposed against an individual in the division’s ocean shipping investigation. Previously, three corporations have agreed to plead guilty and to pay criminal fines totaling more than $136 million, including Tanioka’s employer K-Line, which was sentenced to pay a criminal fine of $67.7 million in November 2014.
Many have worried that all the recent carrier alliances will aid and increase illegal price fixing activities that are allegedly practiced by carriers. It should be noted, however, that the carrier alliances are legal and should only allow shipping companies to work together in vessel operations, not in sales and pricing operations.
As a federal antitrust investigation continues to look into price fixing in international shipping, any individuals with related knowledge or information is urged to call the Antitrust Division’s Washington Criminal I Section at (202) 307-6694 or the FBI’s Baltimore Field Office at (410) 265-8080.
Truckers Awarded $2 Million in Court Case Against International Shipping Company
There have been some hard times for truckers in the international shipping industry of late. Things have been so hard many truckers have left the industry altogether, causing a shortage of drivers.
While many in the international shipping industry have been focused on port congestion and ILWU contract negotiations, many truck drivers have been fighting for their rights.
Truckers have held strikes at the Ports of Los Angeles and Long Beach as well as at trucking companies over the issue of misclassification. Their argument is that companies have been misclassifying truckers as independent contractors instead of employees to steal wages from them.
Well, truckers just won a big victory in their fight.
Steve Gorman reported in KFGO that seven truckers won a $2 million claim against Pacer Cartage for classifying them as independent contractors and charging the truckers to lease the international shipping company’s trucks.
In a decision with implications for hundreds of companies and thousands of truckers in Southern California alone, a San Diego County Superior Court judge held that the seven plaintiffs should have been defined as employees of Pacer Cartage under California’s labor law, not as independent owner-operators.
Judge Jay Bloom ruled the seven drivers, who were Hispanic and spoke little English, were entitled to reimbursement for the money California-based Pacer deducted from their wages for the truck leases, insurance, vehicle maintenance, fuel and other out-of-pocket expenses.
“This is a tremendous victory in the fight against misclassification,” [Alvin] Gomez said, adding that the ruling had the potential to “forever reshape the United States trucking industry.”
He said most California freight hauling companies now operate under the same complex truck-leasing scheme, which the judge ruled violates state labor law.
I would expect to see similar results to many other cases in litigation over this misclassification issue.
Ultimately, the lesson to be learned from these two stories is don’t cheat people to increase your profits. It might work for a while, but you’ll probably find yourself fighting the law. And the law will win.