13-4256-ag
Chief Cargo Servs., Inc. v. Fed. Maritime Comm’n


                                 UNITED STATES COURT OF APPEALS
                                     FOR THE SECOND CIRCUIT

                                                   SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY
FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT=S LOCAL RULE 32.1.1. WHEN
CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE
EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
ASUMMARY ORDER@). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON
ANY PARTY NOT REPRESENTED BY COUNSEL.

      At a stated term of the United States Court of Appeals for the Second Circuit, held at
the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New
York, on the 2nd day of October, two thousand fourteen.

PRESENT: RALPH K. WINTER,
                 REENA RAGGI,
                 PETER W. HALL,
                                 Circuit Judges.
----------------------------------------------------------------------
CHIEF CARGO SERVICES, INC.,
                                 Petitioner,

                               v.                                                No. 13-4256-ag

FEDERAL MARITIME                             COMMISSION,      UNITED
STATES OF AMERICA,
                                 Respondents.
----------------------------------------------------------------------
APPEARING FOR PETITIONER:                         JOSEPH J. PERRONE, Giuliano McDonnell
                                                  & Perrone, LLP, New York, New York.

APPEARING FOR RESPONDENTS:                             TYLER J. WOOD (William J. Baer, Assistant
                                                       Attorney General, Kristen C. Limarzi, Robert J.
                                                       Wiggers, Attorneys, Antitrust Division, United
                                                       States Department of Justice, Washington, D.C.;
                                                       Elisa P. Holland, Paul A. Schofield, Attorney
                                                       Advisors, Federal Maritime Commission,

                                                         1
                                          Washington, D.C., on the brief), Deputy General
                                          Counsel, Federal Maritime Commission,
                                          Washington, D.C.

       Petition for review of an order of the Federal Maritime Commission.

       UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,

AND DECREED that the petition for review of an order entered on September 4, 2013, is

DENIED.

       Petitioner Chief Cargo Services, Inc. (“Chief Cargo”) seeks review of an order of

respondent Federal Maritime Commission (“FMC”) holding Chief Cargo liable under

§ 10(d)(1) of the Shipping Act of 1984 (“Act”), see 46 U.S.C. § 41102(c), and requiring it

to cease and desist from “releasing cargo without requiring presentation of an original bill

of lading,” S.P.A. 16. We review FMC orders under the deference principles set forth in

Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984),

see Merritt v. United States, 960 F.2d 15, 18 (2d Cir. 1992); see also Sea-Land Serv. Inc. v.

Dep’t of Transp., 137 F.3d 640, 645 (D.C. Cir. 1998), and thus ask (1) if “‘Congress has

directly spoken to the precise question at issue,’” and if not, (2) whether “‘the agency’s

answer is based on a permissible construction of the statute.’” Kar Onn Lee v. Holder,

701 F.3d 931, 936 (2d Cir. 2012) (quoting Chevron, U.S.A., Inc. v. Nat. Res. Def. Council,

Inc., 467 U.S. at 842–43). We assume the parties’ familiarity with the facts and record of

prior proceedings, which we reference only as necessary to explain our decision to deny the

petition.


                                             2
1.     Jurisdiction

       Chief Cargo first asserts that the FMC lacked jurisdiction over the complaint filed

by Bimsha International (“Bimsha”). We disagree.

       The FMC’s jurisdiction extends to all alleged violations of the Act. See 46 U.S.C.

§ 41301(a) (“A person may file with the [FMC] a sworn complaint alleging a violation of

this part . . . .”). In its complaint with the FMC, Bimsha explicitly asserted that Chief

Cargo violated § 10(d)(1) of the Act by discharging Bimsha’s cargo without requiring the

“notify party” to present an original bill of lading. Because this invocation of the Act was

not frivolous—indeed, as explained below, the FMC’s merits determination is entitled to

Chevron deference—we reject Chief Cargo’s jurisdictional challenge.             See City of

Arlington v. FCC, 133 S. Ct. 1863, 1873 (2013) (holding that Chevron deference applies to

agency’s determination of its own jurisdiction); see generally New York v. Shinnecock

Indian Nation, 686 F.3d 133, 138 (2d Cir. 2012) (stating that federal jurisdiction exists

where “plaintiff’s ‘well-pleaded complaint’ raises an issue of federal law”).

2.     Liability Under § 10(d)(1)

       Section 10(d)(1) of the Act provides that a non-vessel-operating common carrier,

such as Chief Cargo, “may not fail to establish, observe, and enforce just and reasonable

regulations and practices relating to or connected with receiving, handling, storing, or

delivering property.”    46 U.S.C. § 41102(c).       Chief Cargo argues that the FMC

erroneously concluded that it violated § 10(d)(1) because its misconduct—three times


                                             3
releasing Bimsha’s cargo to the notify party without requiring the presentation of an

original bill of lading in a three month period—was not Chief Cargo’s “practice” and thus

violated only the bill of lading, not the Act. The FMC maintains that the Act prohibits

even isolated failures “to establish, observe, and enforce just and reasonable regulations

and practices,” and thus it properly held Chief Cargo liable.

       We need not decide whether § 10(d)(1) extends to singular instances of misconduct

because even if, as Chief Cargo asserts, something more is implicit in the Act’s reference to

“practices,” under Chevron we must defer to the FMC’s determination that Chief Cargo’s

misconduct here, involving multiple similar acts within a short time frame, constituted

such a “practice.” At the first Chevron step, we identify ambiguity in the phrase “just and

reasonable regulations and practices,” which is not defined in the Act. See Rotimi v.

Holder, 577 F.3d 133, 138 (2d Cir. 2009) (identifying ambiguity where Congress did not

define phrase that was susceptible to “range of possible interpretations”); see also

Plaquemines Port, Harbor & Terminal Dist. v. Fed. Maritime Comm’n, 838 F.2d 536, 549

(D.C. Cir. 1988) (stating that through § 10(d)(1)’s “broad language . . . Congress has

explicitly delegated responsibility for administering the statutory program to the FMC”).

       At the second Chevron step, we defer to the FMC’s conclusion that Chief Cargo’s

repeated failures constituted “an unjust and unreasonable practice.” S.A. 11. Chief

Cargo does not dispute that in a three month period, it three times released Bimsha’s cargo

to the same notify party without requiring the presentation of a bill of lading. Nor does


                                             4
Chief Cargo contest that its President was involved in this misconduct, further indicating

that the failures were not the product of isolated negligence by an errant employee but,

rather, a practice. Substantial evidence thus supported the FMC’s determination that

Chief Cargo was likely to fail to require the presentation of an original bill of lading in the

future.      In such circumstances, we cannot conclude that the FMC’s “practice”

determination was “arbitrary, capricious, or manifestly contrary to the statute.” Chevron,

U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. at 844; accord Adams v. Holder, 692

F.3d 91, 95 (2d Cir. 2012); see also Webster’s 3d New Int’l Dictionary 1780 (1986)

(defining “practice” as, among other things, “repeated or customary action”).

Accordingly, we reject Chief Cargo’s merits challenge to liability.1

3.        Cease-and-Desist Order

          Equally meritless is Chief Cargo’s challenge to the FMC’s cease-and-desist order,

an agency action that we review for abuse of discretion. See generally NLRB v. G & T

Terminal Packaging Co., 246 F.3d 103, 119 (2d Cir. 2001) (reviewing NLRB’s

cease-and-desist order for abuse of discretion); Valicenti Advisory Servs., Inc. v. SEC, 198

F.3d 62, 66 (2d Cir. 1999) (reviewing SEC’s cease-and-desist order for abuse of

discretion). As already observed, substantial evidence supported the FMC’s finding that


1
  To the extent dissenters to the FMC’s decision identified further reasons for doubting the
agency’s liability determination, Chief Cargo does not advance those contentions here, and
thus we deem any such arguments abandoned. See Hoffler v. Bezio, 726 F.3d 144, 154
n.9 (2d Cir. 2013).


                                              5
Chief Cargo was likely to continue the misconduct. Further, we cannot conclude that the

FMC abused its discretion in crafting the cease-and-desist order to apply indefinitely and to

all of Chief Cargo’s clients, not only Bimsha, because Chief Cargo has not demonstrated

why it would ever be appropriate to release any shipper’s cargo without requiring the

presentation of an original bill of lading.2

          Accordingly, we reject Chief Cargo’s challenge to the cease-and-desist order on the

merits.

          We have considered Chief Cargo’s remaining arguments and conclude that they are

without merit. The petition for review is therefore DENIED.

                                     FOR THE COURT:
                                     CATHERINE O’HAGAN WOLFE, Clerk of Court




2
  We express no opinion on whether Chief Cargo could contract with a shipper to permit
the unloading of cargo without requiring the presentation of an original bill of lading as no
party advances that possibility and Chief Cargo may petition the FMC to modify its
cease-and-desist order should it arise. See 46 U.S.C. § 41304(b), (c) (stating that FMC
may “reverse, suspend, or modify any of its orders,” and at party’s request “grant a
rehearing of the same or any matter determined in the proceeding”).
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