Minto Explorations LTD. v. Pacific and Arctic Railway and Navigation Company

Filing 57

ORDER denying w/o prej 11 Motion to Dismiss Count II of plf's cmplt; Count II is referred to FMC and action is stayed pending outcome of FMC's proceedings. Signed by Judge John W. Sedwick on 8/12/11. Signed by Judge John W. Sedwick on 8/12/11. (PRR, COURT STAFF)

UNITED STATES DISTRICT COURT
DISTRICT OF ALASKA

MINTO EXPLORATIONS LTD.,
Plaintiff,
vs.
PACIFIC AND ARCTIC RAILWAY
AND NAVIGATION COMPANY,
Defendant.

)
)
)
)
)
)
)
)
)
)
)

3:11-cv-00031 JWS
ORDER AND OPINION
[Re:

Motion at Docket 11]

I. MOTION PRESENTED
At docket 11, defendant Pacific and Arctic Railway and Navigation Company
(“PARN”) moves pursuant to Federal Rule of Civil Procedure 12(b)(6) to dismiss
Count II of plaintiff’s complaint for failure to state a claim upon which relief may be
granted. In the alternative, defendant PARN moves to dismiss Count II on the grounds
that the Federal Maritime Commission has primary jurisdiction over the claim. At docket
17, plaintiff Minto Explorations Ltd. (“Minto”) opposes the motion. PARN replies at
docket 23. Oral argument on the motion was heard on August 4, 2011.

II. BACKGROUND1
Minto is a British Columbia corporation with its principal place of business in
Yukon Territory, where it operates a copper ore mine. PARN is the owner and operator
of a dock open to the public in Skagway, Alaska. Adjacent to the dock is a support for a
ship loader facility, which is connected to an ore terminal. PARN is the prior owner of
the ship loader facility and ore terminal. In July 1990, PARN sold the ship loader facility
and ore terminal to Alaska Industrial Development and Export Authority (“AIDEA”)
through a purchase agreement (“Purchase Agreement”).
Section 1.10 of the Purchase Agreement states in pertinent part:
1.10 Use of Dock:
(a)

Subject to (b) below, [PARN], in servicing AIDEA, its agents, or
other users of the Purchased Assets, will use its best efforts to
provide dockage to ore ships, at the Dock, in an expedient fashion
and AIDEA, its agents and other users of the Purchased Assets will
adhere to the rules and regulations relating to dockage of [PARN]
and any regulatory authority having jurisdiction over the Dock.

(b)

AIDEA, its agents, or other users of the Purchased Assets will have
the right for the Term to use the Dock for ore ships arriving to load
outgoing free flowing bulk mine products that will be loaded from
the Terminal and for the purposes normally granted to users of the
Dock in consideration of payment of the dockage charge and for
the purpose of tying and untying ore ships and operating, repairing
and maintaining the ship loader and for all related activities...

(c)

(i)

Except as provided in (ii) below, for ore ships arriving to load
outgoing free flowing bulk mine products that will be loaded
from the Terminal, AIDEA will pay or cause to be paid to
[PARN] an all inclusive dockage charge at the then current
ore ship tariff rates of [PARN] as posted at Skagway, Alaska,
or on file with the appropriate government regulatory agency.

(ii)

For ore ships arriving to load Curragh’s outgoing free flowing
bulk mine products, AIDEA will pay or cause to be paid to
[PARN] an all inclusive dockage charge of $US 3.00 per foot
per each period of 24 hours (with any partial periods

1

For purposes of this Rule 12(b)(6) motion, the court takes the factual allegations in
plaintiff’s complaint as true and construes them in the light most favorable to plaintiff.

-2-

considered a full 24 hours), plus (during the period October 1
to May 15 of each year) $US 0.25 per foot per each period of
24 hours (with any partial periods considered a full 24
hours), each escalated on January 1 of each year by the
increase since the preceding January 1 in the Consumer
Price Index, all items Seattle, Washington, which shall be the
only charge payable for use of the Dock for Curragh’s
outgoing free flowing bulk mine products.
In January 2007, AIDEA and Minto entered into a user agreement for the ore
storage and loading facilities (“User Agreement”). Section 1(c) of the User Agreement
states:
c.

Dock. All rights to use the Dock allowed under the Purchase Agreement,
subject to AIDEA’s right to allow Other Users to use the rights to use the
Dock under the Purchase Agreement. To facilitate [Minto’s] use of the
Dock pursuant to the terms of the Purchase Agreement, AIDEA and
[Minto] state that they intend [Minto] to be an “other user” under the
provisions of paragraph 1.10 of the Purchase Agreement.

Minto pays AIDEA for use of the AIDEA owned facilities while loading and shipping
copper concentrate.
On October 25, 2007, Minto shipped copper ore from Skagway with a vessel tied
up to PARN’s dock. After the shipment, PARN delivered an invoice to Minto with a
wharfage charge. PARN’s standard practice is to deliver an invoice to Minto for every
shipment of copper ore from Skagway. To date, Minto has paid PARN $117,617 in
wharfage charges. Minto has not paid PARN for wharfage invoices in the total of
$64,473. Minto has deposited $165,124.91 into an escrow account at First National
Bank of Alaska, representing wharfage due on ore shipment beginning August 2009,
and continues to deposit wharfage charges into the escrow account.
On March 4, 2011, Minto filed a complaint alleging three claims against PARN: 1)
breach of contract; 2) discrimination in violation of AS 42.30.020; and 3) a request for a
declaratory judgment that PARN cannot charge ships transporting ore for Minto a higher
dockage fee or tariff than it charges other vessels, PARN’s current dockage fee for
ships transporting ore for Minto is unlawfully discriminatory under AS 42.30.020, and the

-3-

imposition of “an additional fee of wharfage without landing, loading or unloading its
goods on the dock is unreasonable and a violation of AS 42.30.020.”2
III. STANDARD OF REVIEW
A motion to dismiss for failure to state a claim made pursuant to Federal Rule of
Civil Procedure 12(b)(6) tests the legal sufficiency of the claims in the complaint.3 In
reviewing a Rule 12(b)(6) motion to dismiss, “[a]ll allegations of material fact in the
complaint are taken as true and construed in the light most favorable to the nonmoving
party.”4 “Conclusory allegations of law, however, are insufficient to defeat a motion to
dismiss.”5 To avoid dismissal under Rule 12(b)(6), plaintiffs must aver in their complaint
“sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on
its face.’”6 “A claim has facial plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.”7 “[F]or a complaint to survive a motion to dismiss, the nonconclusory ‘factual content,’ and reasonable inferences from that content, must be
plausibly suggestive of a claim entitling the plaintiff to relief.”8
IV. DISCUSSION
As a preliminary matter, the court notes that both parties attached materials
beyond the pleadings to their briefing. Rule 12(d) provides that if, on a motion under
Rule 12(b)(6), “matters outside the pleadings are presented to and not excluded by the
court, the motion must be treated as one for summary judgment under Rule 56.” The

2

Doc. 1 at p. 7.

3

De La Cruz v. Tormey, 582 F.2d 45, 48 (9th Cir. 1978).

4

Vignolo v. Miller, 120 F.3d 1075, 1077 (9th Cir. 1997).

5

Lee v. City of Los Angeles, 250 F.3d 668, 679 (9th Cir. 2001).

6

Al-Kidd v. Ashcroft, 580 F.3d 949, 956 (9th Cir. 2009) (quoting Ashcroft v. Iqbal, 129
S.Ct. 1937, 1949 (2009) (internal citation omitted)).
7

Iqbal, 129 S.Ct. at 1949.

8

Moss v. U.S. Secret Service, 572 F.3d 962, 969 (9th Cir. 2009).

-4-

court declines to treat PARN’s motion to dismiss as a motion for summary judgment and
will not consider the materials outside the pleadings filed by the parties.
Count II of Minto’s complaint alleges that PARN discriminates against Minto in
violation of AS 42.30.020 by charging ships hired by Minto to ship ore concentrates a
higher per foot dockage fee than other ships using PARN’s dock and by charging Minto
a wharfage fee in addition to a dockage fee. Alaska Statute 42.30.020 provides in
pertinent part:
(a) Every person operating a public service plant or undertaking wholly or
partially in a city for the furnishing of telephone service, water, power, lighterage,
wharfage, dockage, storage, heat or light or kindred public service shall serve
everybody alike without discrimination, and without denial, except for good and
sufficient cause. Every person undertaking to supply this public service shall
adopt reasonable rules and regulations for the conduct of the business and the
operation of the public service plant. The rules and rates of charges for service
shall be given fair and reasonable publicity.9
PARN moves to dismiss Count II of Minto’s complaint on the grounds that it fails
to state a prima facie claim of discrimination under AS 42.30.020 because Minto is the
only ore ship using the dock and passenger ships are a different class of ship than ore
ships. Alternatively, PARN moves to dismiss Count II because the Federal Maritime
Commission (“FMC”) has primary jurisdiction over the claim. The court addresses
PARN’s primary jurisdiction argument first.
PARN argues that the court should dismiss Count II because under the Shipping
Act,10 the FMC has primary jurisdiction over tariff discrimination claims against marine
terminal operators and PARN is a marine terminal operator as defined in 46 U.S.C.
§ 40102(14).11 Minto contends that FMC does not have primary jurisdiction over Count
II because Count II alleges a violation of a state statute, not a violation of the Shipping
Act.

9

AS 42.30.020(a)

10

46 U.S.C. § 40101 et seq.

11

Doc. 11 at p. 6.

-5-

PARN replies that despite the fact that Count II alleges a discrimination claim
under AS 42.30.020, the Shipping Act applies to Minto’s discrimination claim and
primary jurisdiction over the discrimination claim is properly vested in the FMC. The
court concurs. The Shipping Act “provides for the comprehensive regulation of the
shipping industry in the United States.”12 The FMC “is an independent regulatory
agency of the United States charged with the administration and enforcement of the
[Shipping] Act.”13 The Shipping Act applies to a “shipper,” which is defined as including
“a cargo owner” and a “person for whose account the ocean transportation of cargo is
provided.”14 The Act also applies to a “marine terminal operator,” which is defined as a
”person engaged in the United States in the business of providing wharfage, dock,
warehouse, or other terminal facilities in connection with a common carrier...”15 A
“common carrier” is defined as a person that “provide[s] transportation by water of
passengers or cargo between the United States and a foreign country for
compensation.”16 Based on the above definitions, Minto is a shipper and a common
carrier, and PARN is a marine terminal operator that provides dock facilities to common
carriers.
The Shipping Act allows parties to enter into agreements and prohibits certain
discriminatory acts. Pursuant to 46 U.S.C. § 41106, a marine terminal operator may
not:
(1) agree with another marine operator or with a common carrier to boycott, or
unreasonably discriminate in the provision of terminal services to, a common
carrier or ocean tramp;
(2) give any undue or unreasonable preference or advantage or impose any
undue or unreasonable prejudice or disadvantage with respect to any person; or

12

Maritrend, Inc. v. The Galveston Wharves, 152 F.R.D. 543, 548 (S.D. Texas, 1993).

13

F.M.C. v. Port of Seattle, 521 F.2d 431 (9th Cir. 1975).

14

46 U.S.C. § 40102(22).

15

46 U.S.C. § 40102(14).

16

46 U.S.C. § 40102(6).

-6-

(3) unreasonably refuse to deal or negotiate.17
Count II of Minto’s complaint alleges that PARN has discriminated against Minto
by charging its ships more for dockage and wharfage than the rate it charges for other
ships using its dock. Taking the complaint’s allegations as true as the court must for
purposes of a Rule 12(b)(6) motion, § 41106 proscribes PARN’s conduct.18 During oral
argument, it became clear that Minto is the only ore shipper currently using the Dock
and that Minto’s discrimination claim is based on the fact that PARN charges a lower
per foot length for passenger vessels over 400 feet than it does for ore ships over 400
feet in length. The parties did not cite any controlling authority as to whether a marine
terminal operator may charge different types of vessels different dockage rates.
The doctrine of primary jurisdiction “relates to which tribunal, judicial or
administrative, should first act.”19 The doctrine, which expresses deference to
administrative agencies and concern for conserving judicial resources, “is particularly
appropriate where, as here, the contested issued may first be litigated through
established agency procedures.”20 “Where there is a basis for judicial action,
independent of agency proceedings, courts may route the threshold decision as to
certain issues to the agency charged with primary responsibility for governmental
supervision or control of the particular industry or activity involved.”21
Four factors are uniformly present in cases where the court invokes the doctrine
of primary jurisdiction: “(1) the need to resolve an issue that (2) has been placed by
Congress within the jurisdiction of an administrative body having regulatory authority (3)
pursuant to a statute that subjects an industry or activity to a comprehensive regulatory

17

46 U.S.C. § 41106.

18

Maritrend, 152 F.R.D. at 548.

19

Casey v. F.T.C., 578 F.2d 793, 798 n.8 (9th Cir. 1978).

20

Id. at 798.

21

U.S. v. General Dynamics Corp., 828 F.2d 1356, 1362 (9th Cir. 1987) (quoting Port of
Boston Marine Terminal Ass’n v. Rederiaktiebolaget Transatlantic, 400 U.S. 62, 68 (1970)).

-7-

scheme that (4) requires expertise or uniformity in administration.”22 Consideration of
those factors shows that the doctrine of primary jurisdiction should be applied here.
Minto’s discrimination claim is governed by provisions of the Shipping Act, which
provides a “comprehensive regulatory scheme for the shipping industry under the
administration of the FMC.”23 In addition, resolution of Minto’s tariff discrimination claim
requires the FMC’s expertise, particularly with regard to whether a marine terminal
operator may lawfully charge different rates for ore ships and passenger ships. Finally,
Minto’s state law discrimination claim is based on the same facts and theory as one
brought under the Shipping Act. “When a claim ‘both in the nature of the conduct
complained of and the relief sought’ is one which could have been brought under the
Shipping Act ..., the claim may first be properly submitted to the FMC.”24
Minto contends that the court should not dismiss Count II because Minto’s
complaint also seeks injunctive relief which the “FMC is not authorized to grant.” Having
carefully reviewed Minto’s complaint, the court does not find a request for injunctive
relief, but rather a request for a declaratory judgment that “PARN cannot charge ships
transporting ore for Minto a higher dockage fee or tariff than what PARN charges other
vessels for use of the dock,” “the current dockage fee or tariff imposed on ships
transporting ore for Minto by PARN is unlawfully discriminatory,” and “the imposition of
an additional fee of wharfage without landing, loading or unloading its goods an the
dock is unreasonable and a violation of AS 42.30. 020.”25 Moreover, to the extent
Minto’s complaint can be construed as seeking injunctive relief, Minto’s argument is
unavailing because 46 U.S.C.§ 41306(a) provides that “[a]fter filing a complaint with the
[FMC] under section 41301 of this title, the complainant may bring a civil action in a
district court of the United States to enjoin conduct in violation of this part.”

22

General Dynamics, 828 F.2d at 1362.

23

Maritrend, 152 F.R.D. at 555.

24

Id. (quoting A & E Pacific Construction Co. v. Saipan Stevedore Company, Inc., 888
F.2d 68, 72 n.6 (9th Cir. 1989)).
25

Doc. 1 at 7.

-8-

Because both parties to this suit are subject to the Shipping Act’s provisions and
PARN’s conduct as alleged in Minto’s complaint is proscribed by the Shipping Act, the
court concludes that Minto’s discrimination claim is subject to FMC’s primary
jurisdiction. Consequently, the court must determine whether to stay this action “or, if
the parties would not be unfairly disadvantaged, to dismiss the case without
prejudice.”26 Here, Minto’s complaint seeks damages for past conduct, as well as relief
from continuing conduct. Because a damage action for past conduct is subject to the
applicable statute of limitations and may be barred by the time the FMC acts, the court
will stay this action instead of dismissing it.27
V. CONCLUSION
For the reasons set out above, defendant’s motion at docket 11 to dismiss Count
II of plaintiff’s complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) is DENIED
WITHOUT PREJUDICE on the grounds that plaintiff’s discrimination claim is subject to
the primary jurisdiction of the FMC. Count II of plaintiff’s complaint is REFERRED to the
FMC for a determination on any and all issues within its jurisdiction. It is FURTHER
ORDERED that this action is STAYED pending the outcome of the FMC’s proceedings.
DATED at Anchorage, Alaska, this 12th day of August 2011.

/s/ JOHN W. SEDWICK
UNITED STATES DISTRICT JUDGE

26

Reiter v. Cooper, 507 U.S. 258, 268-69 (1993).

27

Carnation Co. v. Pacific Westbound Conference, 383 U.S. 213, 223 (1966).

-9-