The definition of "shipper," the ALJ asserts, should be interpreted broadly. I.D. at 180-81. In Petition for an Amended Statement of Policy Concerning the Status of Shippers' Associations Under the Shipping Act of 1984, 22 S.R.R. 1629 (1985) ("Status of Shippers' Associations"), Petition of the U.S. Atlantic-North Europe Conference and the North Europe-U.S. Atlantic Conference for a Rule Regarding the Term "Shipper", 23 S.R.R. 1381 (1986) ("NEC Petition"), and Definition of Shipper and Availability of Mixed Commodity Rates, 25 S.R.R. 1372 (1991) ("Definition of Shipper"), the Commission, the ALJ maintains, declined to further clarify the statutory definition of "shipper." I.D. at 180. The ALJ further determines that the Commission's refusal to narrow the definition is supported by legislative history wherein Congress stated that "'[s]hipper is defined broadly to include any person for whose account the ocean transportation of cargo is provided as well as consignees of such cargo.'" I.D. at 181 (quoting S. Rep. No. 3, 98th Cong., 1st Sess. 21 (1983)). The Commission in NEC Petition, the ALJ notes, even cautions that various entities may be "shippers" under the Shipping Act although not normally recognized as such, and that therefore a limitation of the definition of "shipper" which may preclude these entities from acting as shippers must be clearly justified. Id.

The Commission has also found, the ALJ maintains, that shippers' associations could not be restricted to "owners or beneficial owners" of cargo, because that would exclude, inter alia, NVOCCs, whom Congress specifically did not exclude by statute. I.D. at 181-82 (citing Status of Shippers' Associations, 23 S.R.R. at 1634-35). Further requests to restrict the definition of "shipper" to, inter alia, tariffed NVOCCs, the ALJ finds, were declined by the Commission as too exclusionary. I.D. at 182-83 (citing NEC Petition, 23 S.R.R. at 1385; Definition of Shipper, 25 S.R.R. at 1372-73). The ALJ thus concludes that "as long as the entity at issue satisfies the definition of 'shipper,' the entity will be deemed a 'shipper,' and the entity's compliance with any other applicable regulations cannot affect the entity's status as 'shipper.' In any given situation the term may apply to, among others: non-owners of cargo, persons having no beneficial interest in cargo, small companies, large companies, transportation NVOCCs - both tariffed and non-tariffed - forwarders, shipper's agents and brokers." I.D. at 183.

After reciting the dictionary definition of "shipper," the ALJ further determines that the "shipper" is the person to whom the common carrier looks for the cargo to be shipped and the payment to be made for the transportation. Id. The ALJ notes that "'[t]here may be other entities involved in ocean transportation who are neither owners of cargo nor NVOCCs but nonetheless could be considered to be shippers.'" Id. (quoting Practices of Various Entities Operating as Intermediaries for the Transp. of Goods in the U.S. Waterborne Foreign Commerce, 24 S.R.R. 277 (1987) (Report to the Commission) ("Fact Finding No. 15")). The ALJ maintains that in the phrase "for whose account the ocean transportation of cargo is provided" in the definition of "shipper," it is clear that the person the carrier keeps the account for is the person for whom it is providing transportation and will look for payment and is thus the shipper. I.D. at 183-84.

The ALJ holds, therefore, that as a matter of law all of the members of OSA identified in the 1994 service contract with TAA were shippers, including the unbonded and non-tariffed entities. I.D. at 184. The Commission has previously found, the ALJ determines, that an entity can satisfy the definition of NVOCC in the Shipping Act without a tariff or bond on file with the Commission. Id. (citing California Shipping Line, Inc. v. Yangming Marine Transport Corp., 25 S.R.R. 1213, 1233 n.23 (1990) ("California Shipping")). The ALJ further relies on the statutory definition of NVOCC, section 3(17) of the Shipping Act, 46 U.S.C. app. § 1702(17),⁽¹⁴⁾ which he maintains makes no reference to tariff or bonding requirements but does require that the entity be a shipper. I.D. 184-85.

Therefore, the ALJ holds that it is irrelevant whether the members of OSA are tariffed and bonded in deciding whether OSA is a valid shippers' association under section 3(24) of the Shipping Act, 46 U.S.C. app. § 1702(24).⁽¹⁵⁾ I.D. at 185-86. To determine whether OSA is a valid shippers' association, the ALJ asserts that the Shipping Act and legislative history only require it to be composed of shippers and meet the statutory definition. I.D. at 186. The ALJ thus finds that in 1994 the members of OSA were shippers and OSA itself was a lawful shippers' association. I.D. at 187.

Rose attempts to support its argument, the ALJ notes, with excerpts taken from a 1995 deposition taken of Walker in Rose Int'l, Inc. v. Trans-Atlantic Agreement, Docket No. 94-23 ("Rose v. TAA"), to which Respondents were not a party. As Rule 209 of the Commission's Rules of Practice and Procedure, 46 CFR § 502.209(a), bars admission of any deposition against a party of which the party was not "present or represented . . . or who had due notice thereof," the ALJ finds that the excerpts should be stricken from the record. I.D. at 187-88.

Moreover, the ALJ finds unpersuasive Rose's argument that OSA was an illegal shippers' association because various members participating in the 1994 service contract with TAA were not NVOCCs with tariffs and bonds. I.D. at 188. Rose failed to present any evidence, the ALJ asserts, that the members of OSA who operated without tariffs or bonds were operating as NVOCCs. Id. Because of the lack of any probative evidence, the ALJ holds that the lack of tariffs and bonds is irrelevant to whether the members of OSA were properly acting as shippers and that Rose has failed to show that OSA was an improper shippers' association or that its members were improper members. I.D. at 188-89.

The ALJ further rejects Rose's argument that OSA obtained ocean transportation at less than the applicable rates by an unfair device or means by hiding the fact that many of its members would be NVOCCs without tariffs and bonds. I.D. at 189. Rather, the ALJ maintains, the evidence shows that OSA did not certify that the signatories to the 1994 service contract with TAA would be NVOCCs, but shippers. Id. Further, the ALJ determines that TAA knew this and charged those shipper members of OSA the rates contained in the service contract. I.D. at 190.⁽¹⁶⁾ Therefore, the ALJ holds that Rose has failed to prove that Respondents deceived TAA, and, as that is an essential element in proving a section 10(a)(1) violation, the claim must be dismissed in this regard. I.D. at 191 (citing United States v. Open Bulk Carriers, 727 F.2d 1061, 1065 (11^th Cir. 1984) ("Open Bulk"); Capitol Transp., Inc. v. United States, 612 F.2d 1312, 1324 (1^st Cir. 1979)).

B. 1995 and 1996 TACA Contracts

The ALJ determines that in 1995, based upon advice from Frank, former Deputy Director of the Commission's Bureau of Tariffs, Certification and Licensing, OMNI decided to form OSSI, an NVOCC with a tariff and bond filed with the Commission and incorporated in the state of Delaware, to which some OMNI, Ltd members would be shareholders. I.D. at 192. The ALJ states that this would allow OSSI members to operate as agents of an NVOCC and thus they would not have to publish individual tariffs or obtain individual financial responsibility. Id. Furthermore, the ALJ finds that TACA was aware of this corporate arrangement; thus, Complainant failed to show that Respondents acted fraudulently as is required under section 10(a)(1). Id.

Moreover, the ALJ finds that Respondents did not act knowingly and willfully to violate section 10(a)(1). The ALJ concludes that Respondents acted in good faith in obtaining advice from Commission staff before forming OSSI. I.D. at 192-93. Furthermore, the ALJ determines that Complainant did not show that OSSI was not acting as an NVOCC. I.D. at 193. The ALJ finds that OSSI filed a tariff and bond and exhibited other factors required to show that an NVOCC is acting as a common carrier. Id. OSSI held out to carry cargo by filing a tariff containing rates which changed at times. Id. Furthermore, contrary to Rose's argument, OSSI did not need to issue house bills of lading because its tariff governed. I.D. at 193-94. The ALJ finds that the tariff provided that all shipments moving under the tariff were subject to the terms of its bills of lading, and that OSSI assumed responsibility for the shipment. Id. Advertising and marketing, the ALJ also finds, are not essential to showing common carrier status as Rose contended. I.D. at 194 (citing Transportation - U.S. Pacific Cost and Hawaii, 3 USMC 190 (1950)). As such, the ALJ rejects Rose's argument that OSSI was a sham NVOCC. Id.

The ALJ further finds that Rose's contention that the agents of OSSI were acting as NVOCCs in their own right rather than as agents of OSSI is unfounded. I.D. at 194-95. The ALJ states that the agents' designation of themselves as "shipper" or the "agent" of the beneficial owner of cargo on the bills of lading was inconsequential, as aberrations are commonplace in a new business, and it was corrected after management instructed the agents as to the requirements of the Agency Agreement. Id. TACA also rated the shipments with these aberrations under the service contract rate. I.D. at 195.

The ALJ determines that OMNI, Ltd did not defraud TACA as to who was the real shipper party to the contracts. Id. Rose's argument that TACA did not know that it was dealing with OSA is unsubstantiated. TACA knew, the ALJ maintains, that it was dealing with a shippers' association as far back as 1994, when it changed the shipper status certification to show that the shipper party was a shippers' association. Id. The name change on the 1996 Contract from OMNI to OSA, the ALJ determines, was a mere formality. Id. Therefore, the ALJ holds that there was no fraud or concealment as to the proper parties to the service contracts. Id.

The ALJ also rejects Rose's contention that the agents of OSSI actually acted on behalf of OMNI, Ltd rather than OSSI. I.D. at 196. The record shows, the ALJ maintains, that the agents were shareholders of OSSI and operated on the basis of the principal-agency relationship with OSSI. Id. Moreover, TACA was aware that the agents were shipping on behalf of OSSI even though the agents booked the cargo and paid freight directly to the carrier members of TACA, and thus the OSSI agents perpetrated no fraud or concealment on TACA. Id.

Rose's claim, the ALJ finds, that TACA did not know which entities to the 1995 Contract would be members of OSA and which would be OSSI agents, is also erroneous. I.D. at 197. The December 29, 1994 letter from Bowen to TACA amending the list of participants to the 1995 Contract clearly shows that OSSI was one of the NVOCC shipper members of OSA and the other entities would be shipping as agents of OSSI. Id. Because the 1995 Contract indicates that OSA will provide TACA with a list of eligible members to ship under the Contract at the time it is executed, and Commission regulations allow the list of affiliates to be incorporated by reference, the ALJ finds that there was no misrepresentation by Respondents to TACA. Id.

The ALJ maintains that the evidence fails to support Rose's argument that OMNI, Ltd is the real party to the three contracts, rather than OSA. I.D. at 198. TACA knew that the shippers' association was operated by Bowen in San Leandro, CA, and was a different entity from OMNI, Ltd in London; that only those members of the shippers' association were eligible to ship under the contracts, rather than all the OMNI, Ltd members; that the 1994 OSA Agreement and the Joint Negotiation Agreement identified the existence of OSA and Bowen as the head of that organization; and that in 1996 TACA filed a correction to the 1996 Contract to change the name of the shipper from OMNI to OSA, which was deemed a name change only. I.D. at 198-99. Therefore, the ALJ holds that Rose failed to meet its burden of showing that OSA was neither a separate entity nor the real shipper, and that TACA was deceived as a result. I.D. 199-203.⁽¹⁷⁾

The ALJ maintains that Rose further failed to prove that the Commission should pierce the corporate veil of OSSI to find that OSSI is OMNI, Ltd's alter ego and that OMNI, Ltd should therefore be held liable. I.D. at 203. The arguments fails, the ALJ finds, because OMNI, Ltd does not own OSSI; rather it is owned by the OSSI agents. Id. In addition, the ALJ determines that the Commission lacks in personam jurisdiction over all of the members of OSSI except Security Storage and Colonial Storage; Rose has not established joint and several liability; and Rose has not proven that Respondents perpetrated a fraud or circumvented or defeated a legislative purpose by creating OSSI. I.D. at 203-04.

C. Federal Forwarding

Rose contends that respondent Federal Forwarding, a licensed and bonded ocean freight forwarder, collected over $2,000 in unlawful carrier compensation on OSSI shipments handled by Security Storage under the 1995 and 1996 Contracts. I.D. at 204. The ALJ finds that the record shows that Federal Forwarding collected "brokerage" rather than "compensation." Id. at 204-05. "Brokerage," the ALJ asserts, is a "small commission or fee paid by most ocean lines to secure cargo" for the carrier.⁽¹⁸⁾,⁽¹⁹⁾ Id. at 205. As there is no prohibition against the same entity acting as both a licensed ocean freight forwarder and an ocean freight broker, and as Rose has presented no evidence to show that Federal Forwarding collected unlawful compensation, the ALJ dismisses Rose's claim against Federal Forwarding. I.D. at 206.

D. Damages

Although the ALJ holds that Complainant failed to prove that Respondents violated the Shipping Act, he goes on to consider Rose's claim for damages and concludes that it too fails. I.D. at 207. The ALJ determines that Rose's evidence that the OSA service contract rates were lower than the TAA/TACA tariff rates is "replete with error," and thus fails to prove that Respondents indeed obtained rates at less than would have otherwise been applicable as required by section 10(a)(1). Id. The ALJ further holds that Rose's claim for lost profits, lost future growth and liquidated damages are speculative and unsupported by the evidence and are therefore rejected, as will be discussed, infra, in the section on "Damages." I.D. at 207-08.

In conclusion the ALJ holds that (1) Complainant has failed to prove that Respondents knowingly and willfully, directly or indirectly, by unjust or unfair device or means of OSA and/or OSSI, obtained ocean transportation for property at service contract rates from TAA/TACA in 1994, 1995, and 1996, that were lower than would otherwise be applicable in violation of section 10(a)(1) of the Shipping Act; (2) Complainant has failed to prove that Federal Forwarding collected unlawful carrier compensation in violation of section 19(d)(4) of the Shipping Act or 46 CFR §§ 510.23(g) and (h); and (3) Complainant's and Respondents' requests for sanctions are denied.⁽²⁰⁾

V. EXCEPTIONS⁽²¹⁾

A. Complainant

Generally, Rose asserts that the ALJ failed to objectively analyze the facts and applicable law in reaching his decision summarily dismissing Rose's claims, and that therefore the Initial Decision is arbitrary and capricious. Rose Exceptions at 7, 10-11.

1. Jurisdiction

Rose contends that the ALJ erred by not discussing jurisdiction, but merely holding that the Commission lacks in personam jurisdiction over all members of OSSI except Security Storage and Colonial Storage, and that Rose failed to establish joint and several liability as to Respondents. Id. at 12. Primarily, Rose claims that the Commission has extraterritorial reach, and thus jurisdiction, over foreign entities that commit violations of the Shipping Act. Id. Furthermore, the Commission does have subject matter jurisdiction over the matter, Rose avers, because the Complaint alleges violations of the Shipping Act based on service contracts filed with the Commission. Id. Rose argues that Respondents waived any challenge to in personam jurisdiction because none of the Respondents raised the issue. Id. at 12-13.

2. Evidentiary issue

Rose disputes the ALJ's finding that Walker's October 23, 1997, deposition testimony should not be deemed biased because Rose failed to establish that Walker's testimony "'was false or that respondents acted illegally in failing to disclose Walker's contemplated change in employment.'" Rose Exceptions at 37 (quoting I.D. at 190). Rose argues that the affidavit of Koenig, in which he states that he heard from three TACA carriers in late November and December, 1997, that Walker was selected as Commercial Director of OMNI, Ltd, is uncontroverted evidence and must be accepted as fact. Rose Exceptions at 38. While the evidence is admittedly hearsay, Rose claims that the Commission can still accept it as evidence under the Commission's Rules of Practice and Procedure and under the Administrative Procedure Act. Id.

In addition, Rose submits a letter dated November 20, 1997, from Bowen to OSSI members referencing a newly created Commercial Division to be headed by a full-time Managing Director, as corroborating evidence that Walker was in negotiations for the position when he was deposed in October. Id. at 39 (Attachment B). Rose requests that this letter be accepted into the record, even though this is the first time Rose is presenting it, because Respondents had not provided it in discovery. Id. Rose further requests that the Commission, based on this letter, reopen the record to take testimony from Walker as to the status of his employment with OMNI, Ltd at the time of the October 23, 1997 deposition. Id. If new testimony is not allowed to be taken, Rose then contends that the Commission must view the October testimony as tainted. Id.

3. Formation of OSA; OSA as an individual entity

Rose argues that the ALJ erred by holding that OSA was a lawful shippers' association and the real party to the 1994 Contract. Id. at 27. As a preliminary matter, Rose objects to the ALJ's finding not credible certain evidence related to whether OSA was the real party to the three service contracts. Id. at 27-28. Rose avers that Walker's deposition of October 23, 1997, should be disregarded because he did not reveal that he was considering employment with OMNI, Ltd as discussed, supra, and that the affidavits of the dismissed Respondents American International, Cartwright, Ocean-Air, and Sentry should have been accepted by the ALJ as credible evidence. Id. at 3, 28.⁽²²⁾ Rose argues that the dismissed Respondents testified to things other than that they never signed the Joint Negotiation Agreement or OSA Agreement in 1994, which should be accepted as fact. Id. at 28. In particular, Rose deems relevant the dismissed Respondents' statements that they were never consulted regarding the name change made to the 1996 Contract and did not know that they were dealing with OSA rather than OMNI, Ltd. Id. Rose asserts, however, that even though there are Joint Negotiation Agreements signed by dismissed Respondents in the record, they are inconclusive as to the existence of OSA because no shippers' association was ever actually formed. Id. at 29. In addition, Rose avers in support of this argument that no other signed OSA Agreements were submitted into evidence even though they were requested by Rose. Id.

Moreover, Rose asserts that the ALJ disregarded Bowen's testimony that changes were made to the OSA Agreement after litigation commenced, even though the ALJ found those changes had in fact occurred. Id. at 28, 30-31. Rose contends that the changes altered the 1996 OSA Agreement from including all of the members of OSA from OMNI, Ltd that accessed the service contracts, whether or not they were bonded and tariffed, to including only those tariffed and bonded members, and further altered language regarding the makeup of the parties to the OSA Agreement. Id. at 30-31. Rose argues that these changes indicate that OSA did not exist until after the commencement of this proceeding. Id. at 31.

Therefore, Rose claims the ALJ erred by concluding that Rose failed to provide evidence to prove that OSA did not exist until 1996 and that the Joint Negotiation Agreements signed by the OSA members were sufficient proof that OSA existed independently from OMNI, Ltd in 1993. Id. at 29, 31.

4. 1994 Contract

a. Whether OSA was an unfair device or means

Rose objects to the ALJ's holding that all OSA members to the 1994 Contract were eligible shippers. Id. at 35-36. The vague certification of the 1994 Contract, Rose asserts, which only states that the affiliates of the shippers' association are "shippers," may be considered the unjust or unfair device used to violate section 10(a)(1) in 1994, because it does not comply with Commission regulations which require a shippers' association to certify the shipper status of its members. Id. at 40 (citing 46 CFR § 514.7(e)).

Rose further disputes the ALJ's determination that if an entity satisfies the definition of "shipper" under the Shipping Act it will be deemed a shipper regardless of the entity's compliance, or lack thereof, with any other applicable statutory requirements or regulations. Id. at 36. Rather, Rose contends that an NVOCC must be bonded and tariffed to access a service contract. Id. at 36-37 (citing 46 U.S.C. app. § 1709(b)(15)).⁽²³⁾ In addition, Rose opposes the ALJ's conclusion that a shippers' association made up of unbonded and non-tariffed NVOCCs is proper as long as the entities are shippers. Id. at 27.

(1) Whether OSA members acted as NVOCCs

Rose further argues that the ALJ erred in finding that Rose presented no proof that the unbonded and non-tariffed members of OSA operated as NVOCCs. Id. at 42. Rose contends that Chicago, Milwaukee, St. Paul & Pacific Railroad Co. v. Acme Fast Freight, Inc., 336 U.S. 465 (1949) ("Acme Fast Freight"), as explained in its Opening Brief below, is analogous to the instant proceeding because it distinguishes between "forwarders" that take responsibility for the carriage of cargo and those that do not. Id. at 43. The Court stated that those "forwarders" that take responsibility for the carriage of the cargo are subjected to common carrier liability. Id. Therefore, Rose claims the case shows that the OSA members were acting as NVOCCs because they took responsibility for the carriage of the shipper customers' goods. Id. at 46-47.

The ALJ also failed, Rose avers, to apply Commission law which establishes how to determine common carriage. Id. (citing Possible Violations of Section 18(a) of the Shipping Act, 1916, and Section 2 of the Intercoastal Shipping Act Arising From Charging Higher Rates Than Specified by Current Tariff, 16 S.R.R. 425 (1975); Activities, Tariff Filing Practices and Carrier Status of Containerships, Inc., 9 F.M.C. 56 (1965) ("Containerships")). Rose alleges that the Commission looks at a number of indicia, some or all of which may exist, including the variety of cargo carried, number of shippers, type of solicitation, regularity of service, port coverage, responsibility toward the cargo, and issuance of bills of lading. Id. at 43-44. Rose claims that the record is replete with evidence showing that OSA members acted as common carriers. Id. at 44. For example, Rose asserts that there is a 1994 letter agreement from Colonial Storage to a shipper customer for "door to door" transportation of the customer's cargo, and that there are various bills of lading that indicate that OSA members were acting as the originating carriers and delivery agents for each other on shipments to and from the United States and Europe. Id. at 46.

Therefore, Rose maintains that there is sufficient evidence in the record that OSSI agents were acting as NVOCCs in 1994.

b. Knowing and willful

Rose disputes the ALJ's holding that Respondents did not act knowingly and willfully to violate section 10(a)(1) with regard to the 1994 Contract. Id. at 53. Rose argues that Respondents knowingly and willfully arranged for unbonded and non-tariffed NVOCCs to access the 1994 Contract. Id. The ALJ found, Rose contends, that in the negotiating stages Bowen requested the 1994 Contract be changed to remove the certification that all the shippers' association members would be NVOCCs. Id. The 1994 Contract was thus amended to certify only that the shippers' association members would be "shippers," rather than bonded and tariffed NVOCCs. Id. Rose argues that Respondents knew that many of the shippers' association's members who intended to access the 1994 Contract would not be tariffed and bonded. Hence, Rose asserts that Respondents knowingly and willfully disregarded the Commission's regulations requiring them to certify the shipper status of its members in order to access the 1994 Contract, thereby obtaining lower rates than otherwise would have been applicable. Id. at 53-54 (citing 46 CFR § 514.7(e)).

5. 1995 and 1996 Contracts

a. Whether OSSI is an unfair device or means

(1) Formation of OSSI; OSSI as a corporation

Rose contends that the ALJ erred by finding that Rose did not satisfy the test to pierce the corporate veil and thus OSSI was not the alter ego of OMNI, Ltd. Rose cites pages of facts that it avers the ALJ did not consider, but which overwhelmingly prove that OSSI was the alter ego of OMNI, Ltd and that OSSI's corporate veil should be pierced. Id. at 13-25. Rose argues that the ALJ failed to address the leading case law of Holborn Oil Trading Ltd. v. Interpetrol Bermuda Ltd., 774 F. Supp. 840 (S.D.N.Y. 1992), setting forth the standards for piercing the corporate veil. Id. at 17-18. Had the ALJ applied the "uncontroverted facts" to the law, Rose asserts, he could only have concluded that the 10-factor test in Holborn Oil, as set forth in Rose's Opening Brief below, had been met. Id. at 18-27.

Applying the facts to the test, Rose avers that OSSI (1) was devoid of formalities and paraphernalia that are part of the corporate existence because it failed to adopt and follow OSSI's bylaws; (2) was inadequately capitalized due to the fact that OSSI agents never deposited any money into the OSSI bank account and OMNI, Ltd minimally financed OSSI, which was in debt to OMNI, Ltd; (3) shared overlapping ownership, officers, directors and personnel with OMNI, Ltd, including Bowen, who is President of OSSI, a Director of OMNI, Ltd and the President of Crown, an OMNI, Ltd member and party to the three contracts; Hopkins, an Officer and or Director of OSSI, Director of OMNI, Ltd, and Co-Managing Director of Movers International, an OMNI, Ltd member; and Starck, an initial Director of OSSI until sometime in 1996, and Vice President of Ocean-Air, an OMNI, Ltd member; (4) shared with Crown common office space, address and telephone numbers because it was operated out of Crown's office by Bowen, but had no independent telephone or fax and did not pay rent; (5) displayed no independent business discretion, but rather its activities were conducted by OMNI, Ltd, Bowen and the "non-tariffed and non-bonded OMNI, Ltd members;" (6) was not dealt with at arms length by OMNI, Ltd or its members; (7) was not treated as an independent profit center because it did not make a profit or receive revenues from operations and all monies went to OMNI, Ltd; and (8) owed the payment of debts to OMNI, Ltd, which had incurred thousands of dollars in expenses on behalf of OSSI. Id. at 18-24.

Finally, Rose contends that an additional factor regarding piercing the corporate veil cited by the court in Bergesen d.y. A/S v. Lindholm, 760 F. Supp. 976, 987 (D. Conn. 1991), applying federal common law, is also met: whether the corporation was organized for fraudulent or illegal purposes. Id. at 25. Rose asserts that the illegal purpose of OSSI is to allow OMNI, Ltd members to access U.S. trade lanes and obtain lower ocean transportation rates without having to file a tariff and bond. Id. Rose further avers that the ALJ overlooked Commission cases on piercing the corporate veil which support Rose's theory without explaining such a departure from Commission precedent. In particular, Rose contends, the ALJ failed to discuss Matter of the Status of Matson Agencies, Inc. & Matson Freight Agencies, Inc., 22 S.R.R. 752 (1984), and In the Matter of Agreement 9597 Between Flota Mercante Gran Centroamericana, S.A., Continental Lines, S.A. and Jan C. Uiterwyk Co, Inc., 10 S.R.R. 177 (I.D.), finalized October 15, 1968 ("Flota Mercante"). Id. at 26-27.

(2) Whether OSSI operated as an NVOCC

Rose further objects to the ALJ's finding that OSSI was indeed operating as an NVOCC. Id. at 32. Rose contends that the ALJ partly based his finding on the fact that TACA knew that OSSI was a bonded and tariffed NVOCC and that it operated through unbonded and non-tariffed agents. Id. The evidence shows rather, Rose claims, that TACA did not know if OSSI was truly an operational and functional NVOCC because it looked only at whether OSSI had a tariff and bond, as opposed to the fact that OSSI did not issue its own bills of lading and did not make a profit or project income. Id.

The ALJ also finds, Rose notes, that the fact that OSSI had a bond and tariff is sufficient evidence to show that OSSI satisfies the "holding out" required of NVOCCs under the Shipping Act. Id. at 33. Rose asserts that the ALJ abandoned Commission precedent in holding that a common carrier need only to file a tariff to be considered holding out and that the Commission need not consider whether that carrier advertised its services, received compensation for providing transportation, or issued a bill of lading. Id. Rose argues that the ALJ also ignored his own findings of fact based on the testimony of Babb of Security Storage that neither Security Storage nor OSSI provided documentation to the shipper customer identifying OSSI as the party responsible for the carriage of the cargo. Id. at 34. Commission cases and the Shipping Act, Rose argues, require more. Id. at 33-34 & n.3 (citing First Int'l Dev. Corp. v. Ship's Overseas Servs., Inc., 21 F.M.C. 899, 903 (1979); 46 U.S.C. app. § 1702(17)). The Commission has held that no single factor determines common carrier status, and that a "'mere corporate shell without property or function can by no stretch of the imagination be deemed a "carrier."'" Id. at 35 (citing River Parishes Co., Inc. v. Ormet Primary Aluminum Corp., 28 S.R.R. 751, 763 (1999) ("Ormet"); quoting Flota Mercante, 10 S.R.R. at 192). The evidence and the law, Rose avers, clearly show that OSSI was not operating as an NVOCC and the ALJ's conclusion otherwise is incorrect. Id.

(3) Whether OSSI agents operated as NVOCCs

The ALJ also erroneously found, Rose contends, that Rose failed to present evidence to show that the OSSI agents were acting as NVOCCs. Id. at 44-45. The Commission must look at the service actually offered to the public and not Respondents' declarations otherwise, Rose asserts. Id. at 45-46 (citing Bernard Ulmann Co., Inc. v. Porto Rican Express Co., 3 F.M.B. 771, 775 (1952)). The OSSI agents were acting as common carriers, Rose claims, because they undertook to deliver the shipments safely to their destination. Id. (citing Acme Fast Freight, 336 U.S. at 485). Rose alleges that the ALJ ignored evidence showing this, in particular, Bowen's affidavit describing that the OSSI agents, by contract or letter agreement, handle the moving of individuals and arrange for, inter alia, the "linehaul transport by road, rail, or sea, local pickup and delivery and other related services," and the letter agreements utilized by the OSSI agents. Id. at 45. There are also various bills of lading, Rose asserts, that indicate that OSSI members were acting as the originating carriers and delivery agents for each other on shipments to and from the United States and Europe. Id. at 46-47. Rose argues that this evidence is analogous to the Commission's decision in Possible Violations of Section 18(a) of the Shipping Act, 1916, and Section 2 of the Intercoastal Shipping Act Arising From Charging Higher Rates Than Specified by Current Tariff, 16 S.R.R. 425 (1975), in which the Commission found that Hawaiian Freight Services, Inc. was a common carrier because the shippers, after surrendering the cargo, exercised no control in selecting the underlying carriers, and therefore it was offering a "coordinated transportation service." Id. at 47.

Rose contends that further proof that OSSI agents were acting as common carriers is that they assumed responsibility for cargo loss and damage claims from the underlying shippers. Id. at 48. The ALJ reportedly failed to consider uncontroverted testimony of Babb and Bowen attesting to this fact. Id.

Therefore, Rose avers that there is sufficient evidence in the record that OSSI agents were acting as NVOCCs in 1995 and 1996.

b. Knowing and willful

Rose disputes the ALJ's conclusion that Respondents did not act knowingly and willfully to violate section 10(a)(1) in 1995 and 1996 because Respondents acted in good faith in setting up OSSI by requesting advice as to the venture from Commission staff. Id. at 49. Rose argues that the evidence contradicts this finding. Id. The Commission has held, Rose avers, that "knowing and willful" behavior can be shown by a pattern of indifference, persistent failure to inform oneself, intentional disregard, wanton disregard, or obstinate behavior akin to gross negligence. Id. at 50 (citing Ever Freight Int'l - Possible Violations of Sections 10(a)(1) and 10(b)(1) of the Shipping Act of 1984, 28 S.R.R. 329, 333 (I.D.), finalized June 26, 1998).

The evidence shows, Rose argues, that Respondents' query to Frank in 1993 failed to specify how OSSI would be operated, i.e., not issuing house bills of lading, not advertising its services, not holding out to the public, etc. Id. at 49-50. Had Frank known this information, Rose contends, he testified that he would have required more information before giving an opinion. Id. Therefore, Rose argues, his original answer could not have been relied on by Respondents in good faith. Id. Respondents' omission of necessary facts, Rose avers, can only be interpreted as intentional or wanton disregard, or gross negligence. Id. at 50-51.

Moreover, Rose asserts that the facts regarding OSSI's corporate structure, or lack thereof, as discussed in its argument to pierce the corporate veil, supra, show that OSSI and its agents knowingly and willfully flouted the statutory and regulatory requirements of an NVOCC. Id. at 51-53.

6. Fraud and concealment

While acknowledging that fraud or concealment is a necessary component of a section 10(a)(1) claim, Rose argues that it is irrelevant whether Respondents concealed their activity from TAA/TACA or whether TAA/TACA colluded with Respondents in violating section 10(a)(1). Id. at 40-41. Rose avers that the D.C. Circuit and the Commission have found that in order to prove a section 10(a)(1) (section 16, initial paragraph, under the 1916 Act) violation, Complainant does not have to show fraud upon the carrier, because "'Congress was concerned both with protection of carriers against unscrupulous shippers, and of honest shippers against unscrupulous competitors, acting independently, or in collusion with a carrier.'" Id. at 41-42 (quoting Hohenberg Brothers Co. v. Federal Maritime Comm'n, 316 F.2d 381, 384 (D.C. Cir. 1963) ("Hohenberg Brothers"); citing Pacific Far East Lines - Alleged Rebates to Foremost Dairies, Inc., Connell Brothers Co., Ltd., & Advance Mill Supply Corp., 10 S.R.R. 1 (1968), aff'd, 410 F.2d 257 (D.C. Cir. 1969) ("PFEL")).

7. Ocean transportation for property obtained at less than rates or charges that otherwise would have been applicable

Rose objects to the ALJ's conclusion that Rose failed to present evidence to prove that Respondents obtained ocean transportation for property at less than the rates or charges that otherwise would have been applicable as required by section 10(a)(1). Id. at 54. Because Rose did not present expert testimony or work papers regarding the tariffs it presented, the ALJ found that Rose's evidence was insufficient. Id. Rose argues that it did not have to present an expert because tariff analysis is within the Commission's expertise. Id. However, Rose still provided summaries of the evidence it presented comparing "the rates of and charges applicable to Eastbound and Westbound shipments of used household goods and personal effects transported by vessel between the United States and Europe under the OMNI Service Contracts with the rates and charges available under the otherwise applicable tariffs of the TAA and TACA." Id. The basis of these summaries, Rose asserts, is the 1994, 1995, and 1996 Contracts and the otherwise applicable tariffs which were all incorporated into Rose's brief as exhibits in the record, which is sufficient under the Commission rules. Id. Rose claims that the exhibits illustrate the "drastic difference" in rates which would have been applicable to OMNI, Ltd shipments had they shipped under the tariff rates, and therefore prove that the service contracts allowed OMNI, Ltd members to obtain rates for less than would have otherwise been applicable under 10(a)(1). Id. at 56.

8. Federal Forwarding

Rose argues that the ALJ erred by finding that respondent Federal Forwarding did not collect unlawful freight forwarder compensation in violation of 19(d)(4) of the Shipping Act and sections 510.23(g) and (h) of the Commission's regulations, but rather collected brokerage. Id. at 56. Rose contends that the evidence overwhelmingly shows that Federal Forwarding acted as a freight forwarder on behalf of its shipper customers and that it received compensation from ocean common carriers on those shipments. Id. at 56-57. Federal Forwarding, Rose further asserts, had a "beneficial interest" in the shipments because they were handled by Security Storage through OSSI under the 1995 and 1996 Contracts. Id. As Federal Forwarding is a wholly owned subsidiary of Security Storage, and Security Storage is a part owner of OSSI, all three are related entities. Id.

Rose avers that Federal Forwarding acted as a freight forwarder on those shipments because it performed freight forwarding activities, including engaging, booking, securing, reserving or contracting directly with the carrier or its agent for space, and it confirmed the availability of that space, and prepared and processed shipping documents. Id. at 58. In addition, Rose claims that Federal Forwarding admitted via testimony of Posey that it acted as a freight forwarder on OSSI shipments, and via testimony of Babb that it prepared the carrier bills of lading. Id. Rose argues that the ALJ's finding, on the other hand, was based on inconclusive evidence. Id. at 59.

The ALJ also erroneously determined, Rose alleges, that there is no prohibition against the common industry practice of the same entity acting as a licensed freight forwarder and an ocean freight broker, and collecting the respective payments for such, on the same shipment. Id. Rose avers that there is neither evidence in the record nor a legal basis to support such a statement. Id. at 60. Rose contends that "[i]t is well established that a freight forwarder cannot claim to be acting in the non-regulated, ocean freight broker capacity simply to avoid the statutory regulations and limitations placed upon freight forwarders." Id. (citing Equality Plastics, Inc. & Leading Forwarders, Inc., Possible Violations of Section 16, First Paragraph, Shipping Act, 1916, 17 F.M.C. 217, 225 (1973) ("Equality Plastics")).

Rose argues that the ALJ further erred by not finding that Federal Forwarding, Security Storage and OSSI violated 46 CFR §§ 510.23 (g) and (h) by failing to provide the proper certification for receiving carrier compensation. Id. at 61. In order to receive carrier compensation as a related entity, Rose asserts, certification under those regulations is mandatory. Id. In addition, Rose claims that an ocean common carrier is prohibited from making payments to secure cargo to a freight forwarder with a beneficial interest in the cargo. Id. at 61 (citing Rates, Charges, and Practices of L. & A. Garcia and Co., 2 U.S.M.C. 615, 627 (1941)).

As such, Rose requests that the Commission overturn the ALJ's ruling and find that Federal Forwarding and Security Storage violated section 19(d)(4) and implementing regulations 46 CFR §§ 510.23(g) and (h).

9. Oral argument

Rose requests that if the Commission does not reverse the Initial Decision's findings and adopt Rose's findings and analysis, it should remand the Initial Decision to the ALJ with instructions to conduct further proceedings in accordance with Rose's exceptions, and grant oral argument pursuant to 46 CFR § 502.241 on the following issues: (1) the standards to be applied in determining whether an entity is a "shipper" under section 3(23) of the Shipping Act; (2) the standards to be applied in determining whether an entity is an NVOCC under section 3(17) of the Shipping Act; (3) the standards to be applied in determining whether an entity is a "shippers' association" under 3(24) of the Shipping Act; (4) the probative value to be accorded the testimony of James Walker; and (5) whether an entity can act and receive compensation as an ocean freight forwarder and an ocean freight broker on the same shipments.

B. Respondents⁽²⁴⁾

As a general matter, Respondents aver that none of Rose's arguments on exceptions supports overturning the ALJ's holding that Rose failed to prove its section 10(a)(1) claim, and thus the case must be dismissed. Furthermore, Respondents dispute Rose's claim that the Initial Decision is biased against Rose and arbitrary and capricious. Resp. Reply to Exceptions at 4-5. Such a claim, Respondents argue, is wholly unsupported by Rose and should be disregarded. Id. at 5-6. Rather, Respondents assert, the Initial Decision is based on and supported by substantial evidence, and the ALJ's findings should be given great weight. Id. at 6.

1. Jurisdiction

Respondents dispute Rose's argument that the Commission has in personam jurisdiction over all of the OSSI agents because the Commission has jurisdiction over foreign entities that violate the Shipping Act. Id. at 21. Respondents aver that Rose failed to name as respondents or serve with the Complaint or Amended Complaint all of the OSSI agents; Rose named and served only Security Storage and Colonial Storage. Id. In accordance with the Shipping Act and Commission regulations, Respondents note that an entity can be made a party to a proceeding only if it is named and served. Id. at 21-22 (citing 46 U.S.C. app. § 1710(b); 46 CFR § 592.62[sic]). Therefore, Respondents contend that the ALJ was correct in holding that the Commission does not have in personam jurisdiction over OSSI agents that were not named and served. Id. at 22.

Respondents also object to Rose's claim that Respondents waived any challenge to in personam jurisdiction. Id. at 23. Respondents alleged in their Answers to the Complaint and the Amended Complaint that the Commission lacked both subject matter and in personam jurisdiction over Respondents. Id. Furthermore, Respondents argue that those unnamed and unserved OSSI agents, as well as OSA (whom Rose refused to acknowledge as a party and who thus was also unnamed and unserved), could not have waived a challenge to jurisdiction since a waiver must be voluntary and knowing. Id. at 23-24.

Therefore, Respondents contend that the Commission has no authority to award Rose any relief against any party not named in the proceeding as a respondent. Id. at 24.

2. Evidentiary issue

Respondents object to Rose's attempt to discredit Walker's October 23, 1997 deposition testimony because of his change in employment from TACA to OMNI, Ltd, and Rose's request to reopen the proceedings to redepose Walker as to the status of that employment at the time of the October deposition. Id. at 37. Respondents argue that Walker did not begin working for OMNI, Ltd until March 6, 1998. Id.

Rose relies on the affidavit of Koenig in which he states that he "heard" from TACA carriers in late November and December, 1997 that Walker was employed by OMNI, Ltd, which Respondents note is hearsay. Id. at 38. However, Respondents claim that if this was true, Rose had every opportunity to redepose Walker regarding this issue before the December 15, 1997 discovery cut-off date, but it failed to do so. Id. Instead, Respondents contend that Rose attacked Walker's testimony as biased for the first time in its Reply Brief below. Id. at 38-39.⁽²⁵⁾

Respondents further oppose Rose's reliance on a November 20, 1997 letter from Bowen to OSSI members that referenced a new division to be headed by a new full-time director. Id. at 40. Respondents argue that while Rose claimed that Respondents withheld the document, Rose fails to establish that it had an outstanding discovery request that would have covered the letter. Id. Moreover, Respondents assert that the letter proves nothing as it does not show that Walker was in negotiation for the position or was indeed the new director. Id.

Respondents contend that Rule 230 of the Commission's Rules of Practice and Procedure, 46 CFR § 502.230, "permits reopening of the record only by petition showing the 'material changes of fact or law alleged to have occurred since the conclusion of the hearing.'" Id. at 40 n.20. Rose has not complied with this rule, Respondents assert, because it had "knowledge" of the issue as early as November, 1997, before the close of discovery or the hearing. Id.

Therefore, Respondents argue that Rose has no right to reopen the administrative record to receive further documents or testimony, and the Commission should deny the request and strike Rose's Attachment B to its Exceptions from the record. Id.

3. Formation of OSA; OSA as an individual entity

Respondents contend that Rose's attempt to show that OSA is not the real party to the three Contracts, but rather was not formed until mid-1996, is unsubstantiated by the record. Id. at 28. In its Exceptions, Respondents claim, Rose relies only on the same evidence it proffered below: Walker's testimony as to the existence of OSA is biased; TACA and OSA changed the name of the shipper party from OMNI to OSA in the 1996 Contract; OMNI made changes to the OSA Agreement in 1996; and the affidavits of the four dismissed Respondents state that they did not know of the existence of OSA. Id. at 29-30. Respondents argue that the evidence overwhelmingly supports the ALJ's finding that OSA existed as early as 1993 and was the real party to the three Contracts, not OMNI, Ltd. Id. at 28-30. Therefore, Respondents assert that the Commission should find that Rose has failed to prove that OSA was not the real party to the Contracts, which, in any event, is irrelevant to its section 10(a)(1) claim. Id. at 30.

4. 1994 Contract

a. Whether OSA was an unfair device or means

Respondents argue that Rose fails to support its exception to the ALJ's finding that the OSA members to the 1994 Contract were "shippers." Id. at 35-36. Respondents claim that the ALJ supported his finding with Commission case law that holds that entities operating as NVOCCs are "shippers" regardless of whether they are tariffed and bonded, and that Rose neither disputes nor distinguishes this precedent. Id. at 36 (citing NEC Petition, 23 S.R.R. 1381; Definition of Shippers, 25 S.R.R. 1372). In fact, Respondents assert, the Commission has held that "the question of who are 'shippers' and proper members of a 'shipper's [sic] association'" is an inquiry separate from regulatory issues. Id. at 36-37 (citing Practices of Various Entities Operating as Intermediaries for the Transportation of Goods in the United States Waterborne Foreign Commerce, 24 S.R.R. 1197 (1988)).

Rose argues in response, Respondents allege, only that the Shipping Act, under section 10(b)(15), prohibits ocean common carriers from knowingly and willfully entering service contracts with NVOCCs that do not have tariffs and bonds. Id. at 36. However, Respondents contest, this prohibition does not supersede Commission case law regarding who is a "shipper" and thus is inapposite. Id. As Rose fails to present any other arguments or case law to refute the ALJ's conclusion that the OSA members were proper shippers under the 1994 Contract, Respondents maintain, it must be upheld. Id. at 37.

(1) Whether OSA members acted as NVOCCs

Respondents argue that Rose's contention that the ALJ failed to consider extensive evidence showing that in 1994 OSA members operated as NVOCCs without tariffs and bonds is unsubstantiated by the record. Id. at 42. Respondents agree with the ALJ's finding that Rose cannot prove this claim because it sought discovery from only two entities that operated without tariffs and bonds, and these few entities are not representative of how other OSA members conduct their business. Id. Respondents contend that Rose relies only on a letter from Colonial Storage in 1994, which addresses a shipment to move in 1995; the testimony and discovery of Koenig, Rose's president; and a letter from OMNI, Ltd to OSA members regarding the formation of OSSI for those members who are "not NVOCCs in [their] own right," which is insufficient evidence to support Rose's claim. Id. at 42-43 & n.21. Therefore, Respondents assert that Rose failed to show that OSA members without tariffs and bonds operated as NVOCCs in 1994. Id.

b. Knowing and willful

Respondents dispute Rose's contention that Respondents acted "knowingly and willfully" in violating section 10(a)(1) because Bowen and TAA changed the shipper status certification to the 1994 Contract because Bowen could not certify that all of the shippers' associations members would be NVOCCs "'because many of them were not NVOCCs.'" Id. at 45-46 (quoting Rose Exceptions at 53 (emphasis added)). Rose claims, Respondents argue, that Respondents knew that many of the members of the shippers' association intending to access the 1994 Contract did not have tariffs or bonds. Id. at 46. Respondents assert that these are mischaracterizations of Bowen's testimony designed to establish that Bowen knew who was joining OSA and what type of entities they were. Id. Respondents contend that Bowen's testimony actually indicates the opposite; Bowen did not know who was joining OSA and what type of entities they were and thus could not sign a service contract that certified that the shippers' association's members would be tariffed and bonded NVOCCs or NVOCCs at all. Id. Therefore, Respondents urge that Rose's argument must be rejected. Id.

5. 1995 and 1996 Contracts

a. Whether OSSI is an unfair device or means

(1) Formation of OSSI; OSSI as a corporation

Respondents contest Rose's exception to the ALJ's finding that Rose failed to satisfy the test to pierce the corporate veil and show that OSSI was the alter ego of OMNI, Ltd. Id. at 24. While Rose claims that the ALJ failed to consider numerous facts in support of its argument, Respondents assert, none of the supposed facts was new. Id.

Respondents argue that piercing the corporate veil is a remedy and not an independent basis to establish liability for the entities on the "other side" of the veil. Id. at 26. Furthermore, Respondents claim that Rose has never established how its request to pierce OSSI's corporate veil establishes a section 10(a)(1) violation. Id. Moreover, Respondents assert, even if the Commission pierced the corporate veil the only entities "on the other side" that could be held liable would be the OSSI agents who are the shareholders of OSSI, who have not been named as parties to the proceeding (except for Security Storage and Colonial Storage). Id. at 26-27.

Respondents further aver that Rose's alter ego theory is also an argument for a remedy but not a basis to show independent liability, and is irrelevant in terms of proving a section 10(a)(1) claim. Id. at 24. Moreover, Respondents contend that the alter ego theory is unnecessary "given Rose's claim that it has established in personam jurisdiction" over OMNI, Ltd. Id. However, Respondents assert that if the Commission does not have in personam jurisdiction over OMNI, Ltd, as Respondents have argued, then the alter ego theory could not be a basis for assessing damages against OMNI, Ltd. Id.

Assuming, arguendo, that the Commission has jurisdiction over OMNI, Ltd, Respondents claim that Rose has not shown that OMNI, Ltd "dominates" OSSI sufficiently to apply the alter ego theory. Id. at 25. Respondents argue that the ALJ's findings of fact only show that OMNI, Ltd "was tangentially involved in and supported the formation of OSSI, and thereafter, handled certain administrative issues pursuant to contract." Id. Furthermore, Respondents contend that in order to assess damages against the dominating entity, the alter ego theory requires the dominating entity, OMNI, Ltd, to have caused the dominated entity, OSSI, to commit the wrongful acts alleged, which Rose has failed to do. Id.

Respondents further aver that assuming all of the above allegations to be true, Rose has not shown that the Commission should also pierce the corporate veil to find the OMNI, Ltd members not parties to this proceeding to be liable for OSSI's actions. Id.

Accordingly, Respondents assert that the Commission must disregard Rose's corporate veil and alter ego theories because Rose has failed to establish that OSSI was knowingly and willfully formed and operated as an unfair device or means to obtain ocean transportation at less than the rates or charges that would have otherwise been applicable, and that it caused damages to Rose. Id. at 25, 27.

(2) Whether OSSI operated as an NVOCC

Respondents contend that Rose incorrectly argued that the ALJ should have held that OSSI was a sham because it was neither a "real NVOCC" nor a "statutory NVOCC." Id. at 30-31. Respondents agree with the ALJ's rejection of Rose's argument and his holding that OSSI held out to the public and assumed responsibility for the transportation of its cargo through its filed tariff. Id. at 31.

Respondents aver that Rose places much significance on its claim that TACA did not know how OSSI operated on a day-to-day basis to prove that OSSI was not a real NVOCC. Id. However, Respondents assert that it represented to TACA only that OSSI was tariffed and bonded and that OSSI would operate through its shareholder agents, and that Rose never presented any evidence or argued to the contrary. Id. at 31-32. As such, Respondents claim, Rose cannot prove that Respondents defrauded or concealed information from TACA regarding the operation of OSSI as required under section 10(a)(1). Id. at 32.

Moreover, Respondents dispute Rose's contention that the ALJ failed to apply the correct law to determine if OSSI was in fact an NVOCC. Id. For instance, Respondents note that the ALJ did not discuss Ship's Overseas, 21 F.M.C. 899; however, Respondents argue that the decision does not apply because it was reversed on appeal to the D.C. Circuit, which held that a broker without a tariff who arranged for the transportation of a single shipment of pipe was not acting as a common carrier. Id. at 32-33. Respondents further contend that the other cases cited by Rose for the proposition that a tariff is meaningless if a carrier has suspended or discontinued service are also inapplicable to the facts here. Id. at 32-33 & n.16.

The ALJ, Respondents aver, properly held that because OSSI filed a tariff and bond, Rose has the burden of proving that OSSI was not holding out to the public to carry cargo. Id. at 33. In addition, Respondents note that the ALJ relied on numerous findings of fact in support of his holding that OSSI was an NVOCC, including, inter alia, that: OSSI filed a tariff and bond; OSSI shareholders purchased stock; each OSSI shareholder entered an Agency Agreement with OSSI which required it to market OSSI's services; and OSSI shareholders were required to collect OSSI freight charges as set by the service contract and pass those on to the ocean common carrier. Id. at 33-34. On the other hand, Respondents assert that the facts relied on by Rose, i.e., that OSSI did not collect or remit funds directly or hire its own employees, were admitted by Respondents, and Rose has shown no legal precedent that would preclude OSSI from holding out in this manner. Id. at 34.

Rose also claimed, Respondents argue, that OSSI did not accept responsibility for its shipments because it did not issue bills of lading to the shipper customers. Id. Respondents aver that the ALJ properly found that OSSI does assume responsibility for the carriage of cargo through its tariff, and that OSSI agents do have OSSI bills of lading which are to be distributed by the OSSI agents to the shipper customers upon request, which comports with the Carriage of Goods by Sea Act ("COGSA"). Id. at 34 & n.18. Rose also cannot rely on the testimony of Babb, Respondents assert, because he testifies that there are several documents which indeed indicate to the shipper customer that OSSI is the NVOCC on its shipment, as discussed in its Reply Brief below. Id. at 35. Furthermore, Respondents claim that the evidence demonstrates that the ocean common carriers to the service contracts understood how OSSI operated. Id.

Therefore, Respondents argue that the ALJ did not rely on a single piece of evidence, but rather looked at several findings of fact to correctly determine that OSSI operated as an NVOCC and was thus not a sham. Id.

(3) Whether OSSI agents operated as NVOCCs

Respondents aver that Rose's exception to the ALJ's finding that Rose failed to prove that OSSI agents acted as NVOCCs is unsubstantiated by the record. Id. at 43. Rose bases its argument, Respondents contend, on "selective, miscellaneous and fragmentary documents from various shipment files of Colonial Storage and Security Storage" and the testimony of Security Storage employees. Id. Respondents argue that while Rose claims that OSSI is nowhere to be found on the shipping documents of Colonial Storage or Security Storage, Babb testified that references to "OMNI," which is shorthand for OMNI Shipping Services, Inc., appeared on departure and arrival notices distributed to the shipper customers. Id. In addition, Respondents claim that Babb testified that TACA carriers knew that Security Storage was acting as an agent booking cargo on behalf of OSSI because of the service contract number listed on the bills of lading, which is verified in several letters sent from the carriers after the commencement of the instant proceeding. Id. at 43-44.

Moreover, Rose contends that the letter agreements from OSSI agents to the shipper customers and the bills of lading showing the OSSI agents as origin and destination agents prove that the OSSI agents were assuming individual responsibility for the transportation. Id. at 44. Such a claim, Respondents argue, is unfounded because this was part of their responsibility under the OSSI contract. Id.

Therefore, Respondents aver that Rose has not shown that OSSI agents acted as NVOCCS and that their argument must fail. Id.

b. Knowing and willful

Rose's claim that the ALJ erred in not finding that Respondents knowingly and willfully set up OSSI to circumvent the Shipping Act, Respondents argue, is absurd. Id. at 44-45. Respondents assert that Rose attempts to argue that counsel for Respondents withheld key facts in his discussion with Commission staff and, therefore, Respondents did not operate in good faith. Id. However, Respondents contend, Rose's argument is unsupportable because many of the facts allegedly withheld were not "facts" at the time Respondents spoke to Commission staff because "OSSI was still in the process of formation and it was not known how it would operate in detail." Id. Other alleged facts, Respondents claim, were either untrue or legal conclusions. Id.⁽²⁶⁾

Therefore, Respondents aver that Rose's argument that Respondents knowingly and willfully created OSSI as an unfair device or means to violate section 10(a)(1) is unsupported by the record and should be rejected. Id.⁽²⁷⁾

6. Fraud and concealment

Respondents contest Rose's assertion, for the first time on exceptions, that the ALJ did not need to find that Respondents deceived TAA/TACA regarding the service contracts because case law does not require a complainant to show fraud upon the carrier to prove a section 10(a)(1) claim. Id. at 41. Rose's reliance on the Hohenberg Brothers case, Respondents assert, is untenable. Id. Respondents argue that Hohenberg Brothers is a "one of a kind" holding which still requires a showing of collusion between a shipper and a carrier to establish the fraud or concealment element of section 10(a)(1). Id. Respondents aver that Rose has not identified any evidence to support a finding of collusion, and admits in its exceptions that its claim is speculative. Id. Moreover, Respondents note that this argument was not raised below and that there is no basis for permitting it on exceptions. Id. Thus, Respondents declare that Rose's argument must be rejected. Id.

7. Ocean transportation for property obtained at less than rates or charges that otherwise would have been applicable

Respondents defend the ALJ's holding that Rose failed to establish that OSA service contract rates were lower than TAA/TACA tariff rates as required by section 10(a)(1). Id. at 51. Respondents contend that Rose relied on the affidavits of an admitted non-expert, Ed Edwards, purportedly comparing TAA/TACA tariff rates and OSA service contract rates. Id. As such, Respondents argue that the ALJ was correct in not finding these analyses reliable. Id.

The ALJ found, and Respondents agree, that Rose provided no work papers, documents, or other record evidence to support the rate comparisons for 1994. Id. at 52. Respondents aver that under Rule 161 of the Commission's Rules of Practice and Procedure, 46 CFR § 502.161, the tariffs themselves do not need to be introduced into evidence; however, a reference to a tariff must be "'specified in its particularity, giving tariff number and page number of tariff . . . in such a manner as to be readily identified.'" Id. Respondents assert that Rose failed to do this as "the TAA tariffs contain tens of thousands of complex rate pages, making it impossible for the ALJ or Respondents to find or cross check the data Edwards is said to have used." Id. Since no correct evidence was submitted for 1994, Respondents claim, Rose cannot prove that the service contract rates were lower than the TAA tariff rates. Id.

Respondents also argue that Rose's evidence for 1995 and 1996 fails to show that the TACA tariff rates were higher, lower or the same as the OSA service contract rates on any given shipment. Id. Respondents agree with the ALJ's finding that Rose used rates not shown to be applicable to Respondents' shipments and rates that were higher than independent action rates by other TACA carriers at the time. Id. The charts, Respondents assert, compare service contract rates to carriers like Sea-Land who were not a party to the 1995 and 1996 Contracts, and fail to take into account assessorials and arbitraries. Id. at 52-53.

Rose also cites no authority, Respondents contend, to support its contention that it is only required to show that the all-inclusive rates under the service contracts were lower than the rates or charges of "general applicability" under the TAA/TACA tariffs. Id. at 53. Respondents aver that section 10(a)(1) requires that the rates obtained be lower than rates "otherwise applicable;" thus, the applicable rates are those of the shipments that are the subject of the alleged violation, not rates of only general applicability which do not apply where a more specific rates exists. Id. Respondents claim that the statute therefore requires Rose to prove that "rates assessed under the Service Contracts on the shipments of cargo actually moved by Respondents were lower than otherwise applicable tariff rates for the same carriers on the same shipments." Id. Hence, Respondents assert that the ALJ was correct in holding that no conclusion can be drawn from Rose's affidavits that the rates in the 1995 and 1996 Contracts were lower than comparable TACA tariff rates. Id.

8. Federal Forwarding

Respondents argue that the ALJ correctly found that the evidence shows that Federal Forwarding collected brokerage and not unlawful freight forwarder compensation, and thus did not violate section 19(d)(4) of the Shipping Act and 46 CFR §§ 510.23(g) and (h). Id. at 47. Rose's claims to the contrary, Respondents assert, are not supported by any evidence. Id. at 47-48. For example, Rose attempts to rely on Federal Forwarding's admission that it never made the requisite certification to the carrier to collect freight forwarding compensation. Id. at 48 n.25. Respondents argue that is because Federal Forwarding was never seeking and never received carrier compensation. Id.

Moreover, Respondents contend that no law or regulations support Rose's argument that the same entity is prohibited from acting as both a freight forwarder and an ocean freight broker on the same shipment. Id. at 48 & n.26 (citing L. Braverman & Co. v. Lykes Brothers Steamship Co., Inc., 21 F.M.C. 372, 375 (1978)).

Respondents also dispute Rose's contention that Federal Forwarding had a beneficial interest in OSSI shipments under 46 CFR § 510.2(b) simply because it is a wholly owned subsidiary of an OSSI shareholder which owns a mere 3% of OSSI. Id. at 48-49 & n.28 (citing Norman G. Jensen v. Federal Maritime Comm'n, 497 F.2d 1053 (8th Cir. 1974); New York Foreign Freight Forwarders and Brokers Assoc. v. Federal Maritime Comm'n, 337 F.2d 289, 294 (D.C. Cir. 1964), cert. denied, 380 U.S. 910 (1965) ("NYFFBA")). Finally, Respondents argue that Rose has never linked Federal Forwarding's alleged violations to the elements of section 10(a)(1) nor shown that Federal Forwarding's actions caused damages to Rose, and therefore, the Commission should affirm the ALJ's finding dismissing Rose's claim against Federal Forwarding. Id. at 49.

9. Oral Argument

Respondents oppose Rose's request for oral argument. Respondents maintain that as the case has been before the Commission for 4 years and as Rose seeks to address issues of either settled law or fact, this proceeding is unsuited for oral argument. Id. at 61-62. The Commission, Respondents contend, has everything it needs to render a final decision, and therefore Rose's request should be denied. Id. at 62-63.

DISCUSSION

The Commission has three major substantive issues before it: (1) whether Respondents violated section 10(a)(1) of the Shipping Act by knowingly and willfully, in 1994, 1995 and 1996, creating a shippers' association, OSA, to circumvent the tariff and bonding requirements to allow unbonded and non-tariffed members of OMNI, Ltd to access service contracts, thereby obtaining transportation by water at less than the rates or charges than would otherwise be applicable; (2) whether Respondents violated section 10(a)(1) by knowingly and willfully, in 1995 and 1996, creating an alleged sham corporation, OSSI, to circumvent the tariff and bonding requirements to allow unbonded and non-tariffed members of OMNI, Ltd to access service contracts, thereby obtaining transportation by water at less than the rates or charges that would otherwise be applicable; and (3) whether Federal Forwarding violated section 19(d)(4) of the Shipping Act and 46 CFR §§ 510.23(g) and (h) (1997), by receiving unlawful carrier compensation.

As we have reviewed the case de novo, it is important to note the evidentiary standard applied in administrative proceedings. The evidence must show by a preponderance of the evidence that something in fact occurred, i.e., more probably than not. Portman Square Ltd. - Possible Violations of Section 10(a)(1) of the Shipping Act of 1984, 28 S.R.R. 80, 84 (I.D.), finalized March 16, 1998. It is appropriate to draw inferences from certain facts when direct evidence is not available, and circumstantial evidence alone may even be sufficient; however, such findings may not be drawn from mere speculation. Waterman Steamship Corp. v. General Foundries, Inc., 26 S.R.R. 1173, 1180 (I.D. 1993), adopted in relevant part, 26 S.R.R. 1424 (1994).

In order to prove a violation of section 10(a)(1), a complainant has the burden of proving that (1) a person, (2) knowingly and willfully, (3) by an unjust device or means, (4) obtained or attempted to obtain ocean transportation rates for property at less than the rates or charges that would otherwise be applicable. As an initial matter, Respondents are "persons" under the Shipping Act, which includes "individuals, corporations, partnerships, and associations existing under or authorized by the laws of the United States or of a foreign country." 46 U.S.C. § app. 1702(20).⁽²⁸⁾ The remainder of the elements will be addressed within the sections addressing violations for a specific contract.

A. Jurisdiction

Before we can address the merits of the case, the Commission must first determine over which entities it has jurisdiction. Neither party argued in its briefs below the existence or non-existence of jurisdiction. The ALJ held that the Commission lacks in personam jurisdiction over all members of OSSI except Colonial Storage and Security Storage. I.D. at 203. Rose disagrees with the ALJ's finding and argues that the Commission has jurisdiction over Respondents and all of OMNI, Ltd's members because "when OMNI, Ltd. appeared before the Commission and answered Rose's complaint, OMNI, Ltd., did so on behalf of its members, including all those who were shareholders and so-called agents of OSSI." Rose Exceptions at 13. Rose further contends that Respondents waived any challenge to in personam jurisdiction; the Commission has extraterritorial reach over all foreign entities that commit violations of the Shipping Act; and the Commission has subject matter jurisdiction over the matter because the proceeding addresses alleged violations of three service contracts filed with the Commission. Id. at 12-13. Respondents aver that the ALJ's holding was correct because the Commission does not have jurisdiction over any entities that Rose failed to either name as a party or serve with the Complaint or Amended Complaint. Resp. Reply to Exceptions at 21-22. Furthermore, Respondents assert that they did not waive a challenge to in personam jurisdiction because they raised it as an affirmative defense. Id. at 23-24.

Respondents are correct that in a complaint proceeding the Commission has no authority to find violations against or hold liable an entity that is not a proper party to the proceeding, i.e., named and served in accordance with the Commission's Rules of Practice and Procedure, 46 CFR § 502.62. However, the Commission does have subject matter jurisdiction and in personam jurisdiction over all of the named Respondents. The Commission has subject matter jurisdiction over the matter because the Complaint alleges violations of the Shipping Act; Congress has enabled the Commission to administer the Shipping Act. Reorganization Plan No. 7 of 1961, 75 Stat. 840, as amended by Pub. L. 91-469, 84 Stat. 1036. The Commission has in personam jurisdiction over Respondents as they have waived the defense by submission, i.e., by participating in the proceedings below, such as discovery and submitting briefs, without moving to dismiss the case for lack of jurisdiction. See Hamilton v. Atlas Turner, Inc., 197 F.3d 58, 60 (2d Cir. 1999) (holding that defendant waived in personam jurisdiction even though defense was mentioned in answer, when defendant participated in extensive pretrial proceedings and passed up numerous opportunities to move to dismiss during the four-year course of litigation). Therefore, the Commission has jurisdiction over all of the named Respondents to the proceeding, but not OSA or those OMNI, Ltd members and OSSI agent-shareholders who were not named in the proceeding. However, as Complainant argues that OSA was not the "real party" to the service contracts, but rather OMNI, Ltd, we will address that issue separately.

B. Evidentiary issues

For the first time in its Reply Brief below, Complainant sought to submit into evidence excerpts of a 1995 deposition of Walker taken in the Rose v. TAA case. Rose's argument for submission was that it learned that Walker was now employed by OMNI, Ltd and that at the time of his deposition in the instant proceeding, October 23, 1997, he had already been approached for that new employment, and therefore his 1997 deposition is tainted and the 1995 deposition is more credible. Respondents filed a supplemental letter after briefs were filed opposing the submission of the 1995 deposition as prohibited by Rule 209(a) of the Commission's Rules of Practice and Procedure, 46 CFR § 502.209(a). The ALJ agreed with Respondents and struck the excerpts from the record. I.D. at 187-88. The ALJ also found that Rose had failed to establish that Walker's 1997 deposition testimony was tainted, and accepted the testimony as credible. I.D. at 190.

On exceptions, Rose argues that the ALJ's determination to strike the 1995 deposition excerpts from the record was incorrect, but fails to proffer any support for its claim. Rose Exceptions at 3. Rose instead attacks the ALJ's finding that Walker's 1997 testimony was credible. Id. at 37. Rose asserts that Koenig's testimony that he heard from three TACA carriers in late November and December, 1997 that Walker was selected as Commercial Director of OMNI, Ltd is uncontroverted and must be accepted as fact. Id. In addition, Rose submits as evidence for the first time on exceptions, a letter dated November 20, 1997 from Bowen to OSSI members referencing a new Commercial Division to be headed by an unnamed Managing Director, in support of Koenig's testimony. Id. at 39. Rose claims that Respondents did not provide the letter in discovery. Id. Based on this evidence, Rose requests that the Commission reopen the proceeding to take testimony from Walker as to the status of his employment with OMNI, Ltd during the 1997 deposition, or in the alternative, view the 1997 testimony as tainted. Id. Respondents oppose Rose's request and agree with the ALJ's holding. Resp. Reply to Exceptions at 37-39. Furthermore, Respondents aver that Rose fails to establish that Respondents were required to produce the letter in discovery, and in any event, the letter does not prove that Walker was in negotiations for or had been offered the position. Id. at 40.

We conclude that the ALJ correctly found that the excerpts from Walker's 1995 deposition should be stricken from the record. Rule 209(a) only allows the use of deposition testimony "against any party who was present or represented at the taking of the deposition or who had due notice thereof." 46 CFR § 502.209(a). Because Respondents were not a party in the Rose v. TAA case, they were not present or represented at the deposition and had no notice thereof.

Furthermore, the ALJ properly held that Rose failed to establish that Walker's 1997 testimony was false or lacked credibility. In accordance with Koenig's testimony, Rose had an opportunity to redepose Walker before the close of discovery on December 15, 1997, and failed to do so. In addition, Respondents correctly point out that Rose did not show that any governing discovery request required the production of the November 20, 1997 letter it seeks to admit into evidence, and that the letter fails to show convincingly that Walker was in negotiations for or was indeed granted a position with OMNI, Ltd at the time of the 1997 deposition. Finally, as Respondents note, Rule 230 of the Commission's Rules of Practice and Procedure requires an explanation of "the grounds requiring reopening of the proceeding, including material changes of fact or law alleged to have occurred since the conclusion of the hearing." As Rose supposedly knew about Walker's employment with OMNI, Ltd before the close of discovery, and because Rose fails to explain any other material changes of fact or law after the close of discovery, its request to reopen the proceeding must fail.

Therefore, the Commission affirms the ALJ's decision to strike the 1995 Walker deposition excerpts from the record and accepts Walker's 1997 deposition testimony as credible. Rose's request to reopen the proceedings to take further testimony from Walker and to strike the November 20 Bowen letter from the record is denied.

C. Formation of OSA; OSA as an individual entity

The ALJ held that OSA was an independent entity and the real party to the 1994, 1995 and 1996 Contracts. I.D. at 198-99. Rose excepts, arguing that the evidence shows otherwise. Rose Exceptions at 27-29. Respondents disagree and contend that the ALJ's finding should be affirmed. Resp. Reply to Exceptions at 28-30.

Rose contends that the ALJ should not have relied on Walker's testimony that he knew he was dealing at all times with a shippers' association separate and apart from OMNI, Ltd, because such testimony is not credible, as discussed, supra. Rose Exceptions at 27-28. Furthermore, Rose asserts that the ALJ should have considered the affidavits of the four dismissed Respondents, American International, Cartwright, Ocean-Air, and Sentry, in which they state that they did not know they were dealing with OSA, a separate shippers' association, rather than OMNI, Ltd, in entering the 1994, 1995 and 1996 Contracts; instead, the ALJ relied on the fact that they signed Joint Negotiation Agreements in 1993. Id. Finally, Rose avers that the changes made to the OSA Agreement in 1996 and the 1996 Contract itself support a finding that OSA did not exist until mid-1996. Id. at 28, 30-31.

We agree with the ALJ's conclusion. The Commission has rejected attempts to prescribe criteria for a shippers' association beyond its definition in the Shipping Act. Petition for Rulemaking Concerning Shippers' Associations, 22 S.R.R. 1624, 1627-28 (1985). There are no statutory or regulatory requirements that a shippers' association meet any structural qualifications or be licensed, bonded or registered in any way. Rose has not argued that OSA's structure was defective, but rather that in fact OSA did not exist at all. There are various instances in the record, and in particular the three service contracts, where "Overseas Moving Network International" is named as the shippers' association rather than OSA. FF 27, 108, 110, 128.⁽²⁹⁾ However, the service contracts all listed the address of "OMNI" the shipper as San Leandro, California, where Bowen operated the shippers' association, as opposed to London. Id. Furthermore, Walker of TAA/TACA testified that "OMNI" to him was a shippers' association run by Bowen in San Leandro, California, which is a different entity than "OMNI, Ltd" in London. FF 28. Walker also stated that the correction made to the 1996 Contract on May 6, 1996, to change the name of the shipper from "OMNI" to "OSA" was merely cosmetic; it did not change the substance of the 1996 Contract because the shipper was still the same entity. FF 143-44. Also, as noted by Walker, only the OMNI members listed in the service contract, not all of OMNI, Ltd's members, were entitled to ship under the 1996 Contract, and Bowen never claimed to represent all OMNI, Ltd members. FF 145-46.

There is also evidence in the record, contrary to statements made by the dismissed Respondents in their affidavits, of signed Joint Negotiation Agreements, which reference OSA and the OSA Agreement, for the 1994 calendar year. FF 20-24. While signed Joint Negotiation Agreements for each participating member of OSA have not been produced, we find this evidence probative of the fact that OSA existed in 1994.⁽³⁰⁾ Rose makes much of the fact that Bowen altered the OSA Agreement in April, 1996, to add the following underscored language: "each party represents and warrants to the other parties that it is either a bonded and tariffed NVOCC . . . or that it acts as an authorized agent for an OSA member NVOCC." FF 137-140. The 1994 OSA Agreement attached a list of all the OSA members, even those that were not tariffed and bonded, suggesting the change was made in order to remove the erroneous and misleading statement. FF 141. This admitted alteration to the OSA Agreement is not probative of whether OSA is an independent entity. It may reflect on what types of entities were members of OSA, but that is not relevant to this issue. As such, the ALJ was correct in not considering this evidence in reaching his conclusion that OMNI, Ltd was not the real party to the 1994, 1995 and 1996 Contracts.

On the basis of the evidence presented, we find that Rose has failed to meet its burden of proving that OSA was not the shipper party to the service contracts. It appears that the parties to the service contracts were aware of OSA's existence as a shippers' association that was distinct from OMNI, Ltd. In addition, there is no law or regulation that requires that a shippers' association be organized in any particular manner. OSA was operated by Bowen as a mechanism for obtaining service contracts for OSA's members only, and not all OMNI, Ltd's members. Therefore, the Commission adopts and affirms the ALJ's finding that OSA, not OMNI, Ltd, was the real shipper party to the 1994, 1995 and 1996 Contracts.

D. 1994 Contract

1. Whether OSA was an unfair device or means

The ALJ held that Respondents did not violate section 10(a)(1) by entering into the 1994 Contract with TAA because the members of OSA were proper shippers under section 3(23) of the Shipping Act; hence OSA was a proper shippers' association and thus not an unfair device or means. The ALJ found that because the 1994 Contract certified only that the members of the shippers' association would be "shippers," it did not matter whether the members were operating as NVOCCs without tariffs and bonds; the only relevant inquiry is whether the shippers' association's members were "shippers" under the Shipping Act. I.D. at 179-80, 186-87. In addition, the ALJ determined that Rose failed to present any evidence that the members of OSA without tariffs and bonds were acting as NVOCCs. I.D. at 188-89. Moreover, the ALJ found that Respondents did not act fraudulently in forming OSA to enable its members to access the 1994 Contract. I.D. at 195.

a. Legality of OSA

Rose excepts to this holding, first arguing that the members of the shippers' association were not eligible shippers, contrary to the ALJ's holding, because an entity that is an NVOCC must be bonded and tariffed to access a service contract, and the members were acting as NVOCCs. Rose Exceptions at 35-36. Moreover, Rose contends that the shipper status certification itself is invalid as it did not comply with the Commission regulation 46 CFR § 514.7(e), which requires that the status of every affiliate to a shippers' association entitled to receive service under the contract be certified, i.e., "owner of the cargo . . . NVOCC, or specified other designation." Id. at 40. Respondents assert that Rose fails to distinguish or dispute the case law relied on by the ALJ to support the holding that entities operating as NVOCCs are "shippers" regardless of whether they are tariffed and bonded, and thus the ALJ's holding must be affirmed. Resp. Reply to Exceptions at 35-37.

We agree with the ALJ. In order to be a "shippers' association," the Shipping Act requires that the association be a "group of shippers that consolidates or distributes freight on a nonprofit basis for the members of the group in order to secure carload, truckload, or other volume rates or service contracts." 46 U.S.C. app. § 1702(24).⁽³¹⁾ Therefore, to be a member of a shippers' association, the only statutory requirement is that the entity be a "shipper" as defined in section 3(23) of the Shipping Act, which states that a "shipper" is, inter alia, the "person for whose account the ocean transportation of cargo is provided." See Status of Shippers' Associations, 22 S.R.R. at 1633-34 (holding that an entity that is a "shipper" qualifies as a participant in a shippers' association unless the Shipping Act otherwise restricts it, which it does not). As the ALJ noted, the Commission has continually rejected further clarifying the definition of "shipper" in order to limit the types of entities that are entitled to access service contracts via shippers' associations. Definition of Shipper, 25 S.R.R. 1372; NEC Petition, 23 S.R.R. 1381; Status of Shippers' Associations, 22 S.R.R. 1629. Rather, as the ALJ stated, the Commission recognizes that "[t]here may be other entities involved in ocean transportation who are neither owners of cargo nor NVOCCs but nonetheless could be considered to be shippers" if, for instance, they are ultimately responsible for paying the ocean freight. Fact Finding No. 15, 24 S.R.R. at 109 n.21. There is no dispute that the OSA members are acting as "shippers" with respect to the TAA carriers on the shipments moving under the 1994 Contract. They were the entities the TAA carriers looked to for payment and for whose account the ocean transportation was provided under the 1994 Contract. FF 30, 32, 33; see Status of Shippers' Associations, 22 S.R.R. at 1633. Rather, Rose's argument rests on whether OSA members were "eligible shippers" in light of the fact that, Rose contends, they were acting as NVOCCs without tariffs and bonds.

Rose argues that the ALJ failed to consider extensive evidence which, when applied to case law, establishes that the OSA members took responsibility for their shipper customers' cargo from the point of receipt to the point of delivery and were designated as "shippers" on the ocean common carrier bills of lading, and thus were acting as common carriers (specifically, NVOCCs). Rose Exceptions at 43-47. Respondents disagree, arguing that the ALJ correctly held that there is insufficient evidence as Rose failed to take discovery from the OSA members that operated without tariffs and bonds, other than Colonial Storage, and that the evidence they did present is wholly inadequate to prove Rose's claim. Resp. Reply to Exceptions at 42-43.

Again, we agree with the ALJ's conclusion. An NVOCC is a "common carrier that does not operate the vessels by which the ocean transportation is provided, and is a shipper in its relationship with an ocean common carrier." 46 U.S.C. app. § 3(17). As a "common carrier" is defined in the Shipping Act, an NVOCC "holds out" to the "general public to provide transportation by water" and "assumes responsibility for the transportation from the port or point of receipt to the port or point of destination." 46 U.S.C. § 1702(6). The Commission has found that no single factor of an entity's operation is determinative of its status as a common carrier. Ormet, 28 S.R.R. at 763; Containerships, 9 F.M.C. at 62-65. Rather, the Commission must evaluate the indicia of common carriage on a case-by-case basis. Id. The most essential factor is whether the carrier holds itself out to accept cargo from whoever offers to the extent of its ability to carry, and the other relevant factors include the variety and type of cargo carried, number of shippers, type of solicitation utilized, regularity of service and port coverage, responsibility of the carrier towards the cargo, issuance of bills of lading or other standardized contracts of carriage, and the method of establishing and charging rates. Id.⁽³²⁾

Rose presented one letter agreement from 1994 to show that Colonial Storage was taking responsibility for the door-to-door transportation of a customer's goods; however, that letter does not even reference the 1994 Contract and is not probative of the nature of Colonial Storage's operations under the 1994 Contract. Furthermore, there are numerous ocean common carrier bills of lading for the 1994 Contract which show OSA members as the "shipper" or "agent" of the beneficial owner of cargo. (FF 32). This is common for a shippers' association that merely negotiates the rates for its members and does not consolidate or distribute the shipments of its members. Rather, the members tender the cargo to the ocean common carrier directly, appear as the "shippers" on the ocean common carrier's bills of lading, and are responsible for the payment of the transportation charges. See Fact Finding No. 15, 24 S.R.R. at 1205-07. Thus, while this evidence indeed shows that OSA members are acting as "shippers" in relation to the ocean common carriers, it fails to otherwise prove that they were in fact "holding out" as carriers to the beneficial owners of the cargo.

The record does contain one ocean common carrier bill of lading for the 1994 Contract showing OSA member Lavanchy SA as the "shipper" and its shipper status as "NVOCC." FF 33. While we would agree that on its face this is an indication that Lavanchy, which is neither tariffed nor bonded, may have operated unlawfully as an NVOCC, it does not on its own, without other corroborative evidence, meet the preponderance of the evidence standard to prove that all of OSA's non-tariffed and unbonded members were acting as NVOCCs under the 1994 Contract. As such, we believe that Rose has fallen short of meeting its burden of proof that OSA's members were operating as unbonded and non-tariffed NVOCCs.

Finally, Commission regulations requiring the certification of shipper status in service contracts do not render a shippers' association something other than a shippers' association in the event that such certifications are incomplete or inaccurate. Section 514.7(e) of the Commission's regulations requires shippers' associations to certify the shipper status of their members, and further requires that those members that are certified as NVOCCs be tariffed and bonded. However, it also allows for a "specified other designation," which may encompass an entity certifying itself as a "shipper." Bowen admits that he informed TAA that the shipper certification in the 1994 Contract would have to be changed because he could not certify that all of OSA's members would be NVOCCs with tariffs and bonds, as he knew that only some of the potential members were bonded and tariffed NVOCCs and others were not. FF 18. The 1994 Contract was therefore changed to certify that OSA's members would be "entitled to service under the contract," i.e., shippers. FF 19. Ultimately, 8 of the 37 OSA members were bonded and tariffed NVOCCs. FF 29. While such a designation may not be what the Commission envisioned in requiring the certification of shippers' status in service contracts, and in fact OSA may have violated Commission regulations in doing so, it does not prove that OSA was not a legitimate shippers' association.⁽³³⁾

b. Fraud and concealment

In its briefs below, Rose attempted to satisfy the fraud or concealment component required to prove a section 10(a)(1) violation by arguing that Respondents deceived TAA by certifying that OSA's members would be entitled to service under the 1994 Contract, when in fact many of OSA's members were NVOCCs without tariffs and bonds and thus ineligible. The ALJ found, however, that the evidence did not show that TAA was deceived by Respondents, but rather that TAA agreed to and was aware that OSA would be certifying only that its members were "entitled to service under the contract," and therefore the section 10(a)(1) claim must fail. On exceptions, Rose changes its argument and now contends that it is irrelevant whether Respondents concealed its activity from TAA, and suggests that TAA may have in fact colluded with Respondents in violating section 10(a)(1). Rose Exceptions at 40-41. Proving collusion, however, Rose avers, is also unnecessary as the D.C. Circuit and the Commission have held that a section 10(a)(1) violation may also be proven by showing that the shipper acted with fraud or concealment to competitors, i.e., Rose. Id. at 41-42 (citing Hohenberg Brothers, 316 F.2d at 384). Respondents assert that not only is Rose making this argument for the first time on exceptions, but also that Hohenberg Brothers is a "one of a kind" case which requires a showing of collusion between shipper and carrier, and thus its argument must be rejected. Resp. Reply to Exceptions at 41.⁽³⁴⁾

It is well established that in order to prove that a party used an unfair device or means to obtain lower rates than would have otherwise been applicable, a showing of some kind of fraud or concealment is required. Open Bulk Carriers, 727 F.2d 1061; PFEL, 10 S.R.R. at 8. Such a showing may include fraud to the underlying common carrier or to competing shippers. The D.C. Circuit, in referring to section 16, initial paragraph, of the 1916 Act, the predecessor of section 10(a)(1), recognized that "Congress was concerned both with protection of carriers against unscrupulous shippers, and of honest shippers against unscrupulous competitors, acting independently, or in collusion with a carrier." Hohenberg Brothers, 316 F.2d at 384. The court held that while the carrier was aware that the shipper's claim for reduced rates and a rebate was fraudulent, "[t]he effect of the entire transaction was that petitioner obtained transportation by water at less than otherwise applicable rates in such a way that its competitors were unaware of what had transpired." Id. at 385 (emphasis added).

The Commission has also found that section 16, initial paragraph, was "aimed at protecting competing shippers and carriers from shippers who attempt to obtain (or succeed in obtaining) transportation at reduced rates through devices or representations involving fraud, falsehood, or concealment." PFEL, 10 S.R.R. at 6. As the shipper and the carrier were both involved in the illegal rebating, the fraud or concealment lay in the failure to disclose the facts of their arrangement "to an important class of persons that [section 16, initial paragraph] was designed to protect; namely, competing shippers." Id. at 8. However, the Commission did not consider it essential to a section 10(a)(1) claim that the shipper and carrier collude, contrary to Respondents' claim. The Commission reaffirmed its position more recently in China Ocean Shipping Co. v. DMV Ridgeview, Inc., 26 S.R.R. 50, 53, 55 (1991) (Order Granting Motion to Dismiss) ("DMV Ridgeview"), in which it stated that the legislative and administrative history of section 16, initial paragraph, shows that it was directed at dishonest shippers in order to protect both carriers and honest shippers from deceptive practices. Therefore, the Commission vacates that portion of the Initial Decision which states that Rose must show that Respondents deceived TAA in order to prove fraud or concealment, as such fraud may be directed toward either carriers or other shippers.

Whether TAA was deceived into allowing non-tariffed and unbonded NVOCCs to access the 1994 Contract through an unlawful shippers' association is irrelevant if it is shown that Respondents' alleged wrongdoing was concealed from competing shippers. However, as we have noted above, OSA was not an unlawful shippers' association whereby ineligible members accessed the 1994 Contract. Thus, no showing of fraud or wrongful concealment can be made, regardless of whether it inured to the detriment of carriers or of competing shippers. As such, we find that Rose failed to show that Respondents acted in a fraudulent or deceptive manner with regard to the 1994 Contract.

Therefore, the Commission adopts that portion of the ALJ's finding that the members of OSA were "shippers" and that OSA was a shippers' association and, as such, was not an unfair device or means to access the 1994 Contract.⁽³⁵⁾

2. Knowing and willful

The ALJ held that Rose failed to prove that Respondents "knowingly and willfully" violated section 10(a)(1) in 1994. Rose contends that the ALJ erred because Respondents knowingly and willfully arranged for unbonded and non-tariffed NVOCCs to access the 1994 Contract. Rose Exceptions at 53. Specifically, Rose asserts that the change of the shipper certification in the negotiating stages of the 1994 Contract -- from certifying that the shippers' association's members would be bonded and tariffed NVOCCs to certifying that the members would be "shippers" -- evidences Respondents' attempt to circumvent the Shipping Act. Id. Respondents argue to the contrary that the alteration to the shipper certification shows only that Bowen did not know which OMNI, Ltd members would become members of OSA and access the 1994 Contract. Resp. Reply to Exceptions at 45-46. It was not an attempt, Respondents aver, to allow access to the 1994 Contract to members that were acting as NVOCCs without tariffs and bonds. Id. In order to prove that a person acted "knowingly and willfully," it must be shown that the person has knowledge of the facts of the violation and intentionally violates or acts with reckless disregard or plain indifference to the Shipping Act, or purposeful or obstinate behavior akin to gross negligence. Portman Square, 28 S.R.R. at 84-85; Ever Freight, 28 S.R.R. at 333. The Commission has further held that a person's "'persistent failure to inform or even to attempt to inform himself by means of normal business resources might mean that a [person] was acting knowingly and willfully in violation of the Act.'" Id. at 84 (quoting Misclassification of Tissue Paper as Newsprint Paper, 4 F.M.B. 483, 486 (1954)); see also McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133 (1988); Trans World Airlines, Inc. v. Thurston, 469 U.S. 111, 128 (1985); United States v. Illinois Cent. R.R. Co., 303 U.S. 239, 242-43 (1938).

The evidence proffered by Rose does not show that Bowen knew there would be entities accessing the 1994 Contract that were acting as NVOCCs without tariffs and bonds, or that Respondents knew that OSA members were using OSA to access the 1994 Contract without complying with the tariff and bonding requirements of the Shipping Act. Rather, the uncontroverted testimony of Bowen states that he did not know what types of entities would be accessing the 1994 Contract and that was why the change was requested, as discussed, supra. FF 18. Moreover, as Rose has generally failed to show that OSA members without tariffs and bonds were acting as NVOCCs, there is no other evidence in the record that contradicts Bowen's statement. The evidence does not meet the threshold to show that Respondents acted knowingly and willfully to violate section 10(a)(1), and, therefore, the Commission adopts the ALJ's holding.

3. Ocean transportation for property obtained at less than rates or charges that otherwise would have been applicable

The ALJ finds that Rose's evidence that OSA service contract rates were lower than the TAA tariff rates is replete with error and fails to prove that Respondents obtained rates at less than otherwise would have been applicable. I.D. at 207. Rose argues that its evidence was sufficient under Commission rules; its summary analysis of the rates, although not produced by an "expert," is said to be adequate, because tariffs are within the expertise of the Commission. Rose Exceptions at 54. Although 1994 TAA tariff pages were not available on ATFI, Rose claims, they were readily identified per Rule 161 of the Commission's Rules of Practice and Procedure, 46 CFR § 502.161. Id. at 55 n.7. Respondents contend, however, that Rose's reliance on an admitted non-expert is not reliable evidence to prove that the 1994 Contract rates were lower than otherwise applicable TAA tariff rates, particularly because Rose provided no work papers or other documents to support the rate comparisons for 1994. Resp. Reply to Exceptions at 51-52. Respondents assert that Rose failed to comply with Rule 161 in that it did not specify the tariffs with particularity as required. Id. at 52. Therefore, Respondents contend that as no evidence was submitted for 1994, Rose's claim must fail. Id.

We agree with the ALJ and Respondents. Rose readily admits that it submitted no tariff pages for rate comparisons for 1994. Rather, Rose has submitted charts allegedly comparing the 1994 Contract rates and 1994 TAA tariff rates. Rose is correct that matter in tariffs that are filed with the Commission does not have to be produced; however, such matter "shall be specified in its particularity, giving tariff number and page number of tariff, report, or document in such manner as to be readily identified." 46 CFR § 502.161. Rose has identified tariff numbers but, in ignoring the other requirements of the rule, has failed to provide any other information which would enable the Commission to verify its claims, i.e., Rose has not provided tariff page numbers or the tariff pages themselves, which would enable the Commission to evaluate the accuracy of its purported rate comparisons. As such, Rose has failed to present sufficient evidence to show that in 1994 Respondents obtained ocean transportation at rates less than would have otherwise been applicable as required by section 10(a)(1). Therefore, the Commission adopts the ALJ's finding.

As Rose has failed to show that Respondents knowingly and willfully created OSA as an unfair device or means to obtain ocean transportation for property via the 1994 Contract at less than the rates or charges that otherwise would have been applicable, the Commission dismisses Rose's section 10(a)(1) claim for 1994.

E. 1995 and 1996 Contracts⁽³⁶⁾

Rose contends that Respondents violated section 10(a)(1) in 1995 and 1996 by knowingly and willfully creating a sham corporation, OSSI, as an unfair device or means to circumvent the tariff and bonding requirements of the Shipping Act to allow unbonded and non-tariffed members of OMNI, Ltd to access service contracts entered into with TACA, thereby obtaining transportation by water at less than the rates or charges that would otherwise be applicable. In analyzing this claim, Rose argues that the Commission must pierce OSSI's corporate veil.⁽³⁷⁾

When analyzing whether the Commission should disregard OSSI's corporate form and pierce the corporate veil, the first inquiry is what law should be applied. It has been held that when a substantive federal interest is at issue, federal common law, rather than state law, governs. United States v. Pena, 731 F.2d 8, 12 (D.C. Cir. 1984) (citations omitted). Complainant is alleging a violation of section 10(a)(1), whereby it claims that Respondents created a corporation, OSSI, to operate as a sham NVOCC in order to violate the Shipping Act. Thus, violations of the Shipping Act are at issue, and federal common law should be applied.

The federal common law that has been developed generally recognizes a two-prong test to determine whether to disregard corporate form: the evidence must show (1) control and domination over the shell corporation, and (2) a federal violation. See Piercing the Corporate Veil: The Alter Ego Doctrine Under Federal Common Law, 95 Harv. L. Rev. 853, 866-67 (1982). The first prong of the test will be addressed in the course of our analysis of whether OSSI, as an allegedly sham corporation, is an unfair device or means, which is one of the factors of a section 10(a)(1) claim. The second prong will be determined by analyzing whether Respondents violated section 10(a)(1) as a whole.

1. Whether OSSI is an unfair device or means

a.  Legality of OSSI; whether OSSI operated as an NVOCC

The ALJ held that OSSI was an NVOCC whose shareholder agents lawfully shipped cargo on its behalf under the 1995 and 1996 Contracts, and that OSSI was not the alter ego of OMNI, Ltd, and therefore, was not an unfair device or means to obtain lower rates than otherwise would have been applicable in violation of section 10(a)(1). I.D. at 193, 196, 203-04. The ALJ further found that Respondents did not act fraudulently in creating and forming OSSI. I.D. at 192. Rose disagrees, arguing that the ALJ failed to consider numerous facts and case law that show that OSSI was a sham NVOCC corporation and which warrant piercing the corporate veil to find that OSSI was the alter ego of OMNI, Ltd. Rose Exceptions at 18-27, 32-35, 44-48. Respondents dispute Rose's exceptions and contend that the ALJ's holding was correct. Resp. Reply to Exceptions at 24-27, 32-35, 43-44.

There are several elements that must be found in order to support a conclusion that OSSI was used by Respondents as an unfair device or means to allow entities acting as NVOCCs without tariffs and bonds to access the 1995 and 1996 Contracts. It must be determined that OSSI was not in fact operating as an NVOCC, but was merely a shell corporation whereby OSSI agents were able to act as NVOCCs without having to file individual tariffs and bonds. As part of determining that OSSI was a "shell" corporation, the Commission has to find that OSSI was the alter ego of OMNI, Ltd and as such the Commission should ignore OSSI's corporate form. In addition, the Commission must find that OSSI's shareholder agents were not acting on behalf of OSSI, but rather as NVOCCs in their own right. Finally, the Commission must determine that Respondents acted fraudulently in arranging the scheme.

The ALJ held that the fact that OSSI filed a tariff and bond is sufficient evidence to show that OSSI was acting as a common carrier under the Shipping Act. I.D. at 193 (citing 46 U.S.C. app. §§ 1707 and 1721). The ALJ determined that OSSI's tariff demonstrated that it was holding out; that OSSI did not need to issue house bills of lading because the tariff provided that all shipments moving under the tariff were subject to the terms of its bills of lading; and that OSSI assumed responsibility for the shipment. I.D. at 193-94. Finally, the ALJ found that a carrier's advertising and marketing efforts are not essential to determining common carriage.⁽³⁸⁾ I.D. at 194. Rose argues that the ALJ abandoned Commission precedent in reaching this conclusion, which requires an analysis of the indicia of common carriage and not just one single factor. Rose Exceptions at 33-34 (citing Ship's Overseas, 21 F.M.C. at 903; Ormet, 28 S.R.R. at 763). Rose further avers that the ALJ ignored his own findings of fact showing that neither Security Storage nor OSSI provided documentation to the shipper customer identifying OSSI as the party responsible for the carriage of cargo. Id. at 33. Moreover, Rose asserts that the ALJ failed to apply leading case law and consider a plethora of facts which overwhelmingly prove that OSSI did not operate as a real corporation. Id. at 13-27. If he had, Rose argues, the ALJ would have concluded that OSSI was the alter ego of OMNI, Ltd and that OSSI's corporate veil should be pierced. Id.

Respondents, however, agree with the ALJ's finding that OSSI did hold out and assume responsibility for the transportation of cargo through its tariff. Resp. Reply to Exceptions at 31. Respondents also dispute Rose's claim that the ALJ applied incorrect law to determine whether OSSI was operating as an NVOCC; the cases cited by Rose are allegedly inapplicable to the instant proceeding. Id. at 32-33. Furthermore, Respondents contend that the ALJ relied on numerous findings of fact in making his decision: OSSI filed a tariff and bond, OSSI shareholders purchased stock, OSSI shareholders signed Agency Agreements requiring them to market OSSI's services, and OSSI shareholders were required to collect the freight charges and pass them on to the underlying carrier. Id. at 33-34. Rose's reliance on OSSI's failure to issue house bills of lading, Respondents assert, is also not probative, as OSSI does not have to issue such bills of lading to its shipper customers in order to be a common carrier. Id. Respondents argue that Babb pointed out several documents issued by Security Storage to the shipper customers which reference OSSI as the NVOCC. Id. at 35. Moreover, Respondents aver that Rose's alter ego and corporate veil theories are remedies and not independent bases to establish liability.⁽³⁹⁾ Id. at 24-27. Respondents further contend that the facts fail to show that OMNI, Ltd sufficiently dominated OSSI, but rather just that OMNI, Ltd was tangentially involved and supportive of OSSI. Id. at 25. Respondents also contend that Rose failed to establish, as required, that OMNI, Ltd caused OSSI to commit the allegedly wrongful acts. Id. Finally, Respondents agree with the ALJ that Rose's theory must fail because it can pierce the corporate veil only to OSSI shareholders, not OMNI, Ltd.⁽⁴⁰⁾ Id. at 26-27.

Rose is correct that the ALJ failed to apply the correct legal precedent in making his determination. As discussed, supra, in order to determine whether an entity is acting as an NVOCC, it must first be decided whether the entity is a common carrier. The entity must therefore be "holding itself out to the general public to provide transportation by water of passengers or cargo between the United States and a foreign country for compensation that assumes responsibility for the transportation from port or point of receipt to the port or point of destination." 46 U.S.C. § 1702(6). The Commission ascertains whether an entity is "holding out" by looking at the indicia of common carriage, contrary to the ALJ's holding that a carrier's tariff is determinative.⁽⁴¹⁾ Ormet, 28 S.R.R. at 763; Containerships, 9 F.M.C. at 62-65. While the Commission usually is faced with determining whether an entity that claims it is not a common carrier is actually operating in common carriage, it has also found that "'a mere corporate shell without property or function can by no stretch of the imagination be deemed a "carrier."'" Flota Mercante, 10 S.R.R. at 192 (quoting County of Marin v. United States, 356 U.S. 412, 418 (1958)). Thus, in addition to making a common carriage analysis, we must also apply the alter ego analysis to determine whether OSSI is a functioning NVOCC corporation.

The factual tests vary from circuit to circuit, but some of the major factors used to determine domination and control, and which we will consider, are as follows: (1) the nature of the ownership and control; (2) failure to maintain corporate minutes or adequate corporate records and failure to follow corporate formalities; (3) commingling of funds and other assets; (4) inadequate capitalization; (5) diversion of the corporation's funds or assets to non-corporate uses; (6) use of the same office or business location by the corporation and its shareholders; (7) overlapping ownership, officers, directors and personnel; (8) the amount of business discretion displayed by the allegedly dominated corporation; and (9) whether the corporations are treated as independent profit centers. Holborn Oil Trading Ltd. v. Interpetrol Bermuda Ltd., 774 F. Supp. 840, 844-45 (S.D.N.Y. 1991); Labadie Coal Co. v. Black, 672 F.2d 92, 96-99 (D.C. Cir. 1982); Ariel Maritime Group, Inc., 24 S.R.R. 517 (1987) (Order Adopting in Part, Reversing in Part, and Supplementing I.D.).⁽⁴²⁾ Moreover, the Commission has found that "[i]t is appropriate to pierce the corporate veil in order to prevent such use of the corporate device to commit . . . statutory violations" and when "'failure to do so would enable the corporate device to be used to circumvent a statute.'" Ariel, 24 S.R.R. at 530 (quoting Joseph A. Kaplan & Sons v. Federal Trade Comm'n, 347 F.2d 785, 787 n.4 (D.C. Cir. 1965)); see also Capital Tel. Co., Inc. v. Federal Communications Comm'n, 498 F.2d 734, 738 n.10 (D.C. Cir. 1974) ("Where the statutory purpose could be easily frustrated through the use of separate corporate entities a regulatory commission is entitled to look through corporate entities and treat the separate entities as one for purposes of regulation.").

It is undisputed that OSSI filed a tariff and bond with the Commission in order to operate as an NVOCC, pursuant to requirements of the Shipping Act and the Commission's regulations. FF 58. In February, 1995, OSSI also purchased additional cargo liability and errors and omissions insurance in the amount of $500,000, which it renewed for 1996. FF 60. Contrary to the ALJ's conclusion, these facts alone do not qualify OSSI as holding out. As both the ALJ and Respondents observed, there were no prohibitions against an NVOCC offering NVOCC services through an agent or agents in 1995 and 1996.⁽⁴³⁾ However, this does not immunize an entity from violating the Shipping Act or Commission regulations if it is indeed merely a shell used by illegally operating NVOCCs to offer NVOCC services without a tariff and bond. Therefore, we must look to the other requirements of "holding out."

43. This has changed under OSRA; section 19 of the Shipping Act now requires all persons in the United States offering ocean transportation intermediary ("OTI") services, including those persons operating as agents, to be licensed. See also 46 CFR § 515.3.

44. In this connection, Rose excepts to the ALJ's failure to consider the affidavit of counsel for Intercargo Insurance Company, which states that if a covered NVOCC did not issue a bill of lading or any contract of carriage, was not involved in the shipment, did not assume responsibility for the shipment, or did not provide transportation, then a claim would not be deemed covered under its policy. Rose Exceptions at 48. Respondents contend that Rose fails to explain the relevancy of this "truism." Resp. Reply to Exceptions at 44 n.22.

45. Respondents also argue that comparison to Sea-Land rates are unfair because they have the highest tariff rates in the household goods industry. Resp. Reply Brief at 107-08. This is irrelevant to determining whether the service contract rates were lower than otherwise applicable tariff rates; the key question is whether the Sea-Land rates were otherwise applicable, not whether those tariff rates were higher or lower than the average tariff rates.

46. This argument would be more suitable in determining the appropriate measure of damages, to be discussed, infra.

47. Review of the tariff rates named on the spreadsheets against the assessorial charges named in the underlying TACA TLIs as filed in ATFI has confirmed that the tariff sources for these three charges are as follows. The source for the BAF outbound from the U.S. to Europe and the U.K. is Tariff Rule 10, Sub-rule B, TACA Eastbound Rules Tariff 012851-060. The BAF inbound from Europe and the U.K. to the U.S. is nil. The source for the CAF outbound from the U.S. to Europe and the U.K. is Tariff Rule 10, Sub-rule A, TACA Eastbound Rules Tariff 012851-060. The source for the CAF inbound from Europe and the U.K. to the U.S. is Tariff Rule 10, Sub-rule A, TACA Westbound Rules Tariff 012851-053. The source for the THC outbound from the U.S. to Europe and the U.K. is Tariff Rule 23, Sub-rule A, TACA Eastbound Rules 012851-060. The source for the THC inbound from Europe and the U.K. to the U.S. is Tariff Rule 23, Sub-rule A, TACA Westbound Rules Tariff 012851-053. For the 1995 and 1996 Contracts, pursuant to either Rule 111, Clause I, or Rule 112, of TACA ETP 012851-048, the BAF, CAF, and THC apply as named in TACA Eastbound Rules Tariff 012851-060 or TACA Westbound Rules Tariff 012851-053 unless otherwise specified in Term 10 of the respective contract as filed in TACA ETP 012851-048.

48. Now 46 CFR § 515.2(o)(1).

49. Now 46 CFR § 515.42(c).

50. "Compensation" and "brokerage" are distinct and separate terms as defined by the Commission. There are numerous cases which have used these terms interchangeably and have consequently caused a great deal of confusion among the parties in this case in their interpretations of relevant case law. The distinctions between them, as explained above, are significant and should be preserved.

51. Both Posey and Babb testified as to the payments that Federal Forwarding received from the underlying carriers; Posey testified that Federal Forwarding received brokerage, while Babb testified that it received compensation.

52. This was formerly section 44(e) of the 1916 Shipping Act, and has been reconfigured to its current form by the 1984 Act at 46 U.S.C. app. § 1718(d), now 46 U.S.C. app. § 1718(e).

53. Now 46 CFR § 515.2(b).

54. This finding also applies to requests for sanctions made in the section on "Damages," infra.

55. To avoid speculation, Rose states that it bases its damages for these two customers on its actual 1993 per container profits.

56. Rose contended that it must and can establish a conversion factor between Rose and OMNI, Ltd's systems which are based on number of containers handled and number of TEUs handled, respectively. Based on experience, Rose asserted that the conversion of TEUs to containers is the factor of 0.64 or 697 containers/1088 TEUs. Id. at 114-115.

57. In this section we summarize Respondents' Opening Brief and Reply Brief together as many of the same arguments were presented.

58. Specifically, Respondents argued that Koenig admitted that document handling costs of up to $125 were absorbed by Rose on Graebel and Movers International shipments, but that that cost was not subtracted from the gross profit calculations. Resp. Opening Brief at 161-62.

59. Respondents further argued that the Commission must reject Rose's evidence regarding profit figures because Rose failed to provide in discovery any "shipment records or per-container profit figures for non-OMNI Rose customers in 1993." Id. at 120-21.

60. For example, Respondents claimed that Rose failed to consider the decrease in profit margin for the movement of Graebel's cargo between 1991 and 1993 as testified to by Koenig, thus showing that there was preexisting market pressure on Rose before 1994. Resp. Opening Brief at 151-52.

61. Rose noted that Rule 11 sanctions have been warranted when a party made deliberate misrepresentations by omission. Id. at 78 (citing Itel Containers Int'l Corp. v. Puerto Rico Marine Management, Inc., 108 F.R.D. 96 (D.N.J. 1985)).

62. Rose averred that Respondents' argument that there are discrepancies in Rose's damages summary compared with that presented during Koenig's deposition is irrelevant, because the document used in Koenig's deposition was a "secondary source document" only intended "to be a roadmap" and not the final damages summary. Rose Reply Brief at 71 n.14.

63. Rose claimed that, rather than projecting actual rate of growth, it assumed continued growth at a lower and declining rate, and thus the amount of damages claimed is more probable than not. Id. at 188.

64. Rose does not further explain this figure.

65. Rose does not further explain this figure.

66. Rose does not further explain this figure.