GKG Law Wins Six-Figure Attorneys’ Fees Award for NVOCC Against Shipper who Refused to Pay Detention and Demurrage
GKG Law Wins Six-Figure Attorneys’ Fees Award for NVOCC Against Shipper who Refused to Pay Detention and Demurrage
By John H. Kester
GKG Law recently won $134,364 in attorneys’ fees and $1,135.76 in litigation costs for its client, a non-vessel-operating common carrier (“NVOCC”), in litigation before the Federal Maritime Commission (“FMC” or “Commission”). GKG Law previously had prevailed in the underlying action, wherein a shipper wrongly refused to pay more than $1 million in detention and demurrage charges and was seeking a refund of more than $1 million that it had paid the NVOCC.
Following an Initial Decision in its client’s favor, and the Commission’s affirming that Decision in full, GKG Law filed a petition for the shipper to pay the NVOCCs’ attorneys’ fees and costs because the shipper had failed to act in good faith in refusing to pay detention and demurrage payments that it had encouraged the NVOCC to advance on its behalf, and further had failed to act in good faith in filing suit to try to escape its payment obligations.
In deciding to award attorneys’ fees and costs, the FMC pointedly agreed with GKG Law’s argument, stating, “[The shipper]’s pursuit of patently baseless claims that were contradicted by its own long-standing course of dealing with [the NVOCC] for improper purposes weigh heavily in favor of awarding [the NVOCC] the fees it incurred in defending those claims.” It further recognized, as asserted by GKG Law, that the Shipper “did not have a colorable legal or factual basis for asserting that OSRA 2022 [(The Ocean Shipping Reform Act of 2022)], which was not retroactive, applied to claims that arose before its June 2022 effective date.”
In so holding, the Commission emphasized that it is antithetical to the Shipping Act for non-paying shippers to force NVOCCs to defend frivolous claims:
It is contrary to the purposes of the Shipping Act in promoting a system that works efficiently and fairly for NVOCCs… to be compelled to defend lengthy and costly litigation to retain or recoup pass-through charges which they were plainly due under the terms of their NRA with the shipper and for which the shipper previously and repeatedly acknowledged responsibility.
The Commission further highlighted that GKG Law’s attorney billing rates were consistent with – or even below – reasonable fees in the Washington, D.C. area.
The award of attorneys’ fees and costs here marks a significant victory for NVOs, confirming their ability to pass-through detention and demurrage charges to those parties ultimately responsible for payment of the charges, and their entitlement to recover attorneys’ fees if the shipper files groundless litigation in order to evade its payment obligations.
Please contact us if you have any transportation-related or other litigation-related issues. Brendan Collins may be reached by telephone at (202) 342-6793 or by e-mail at bcollins@gkglaw.com; John H. Kester may be reached at (202) 342-6751 or by e-mail at jkester@gkglaw.com; Rachel Amster may be reached at (202) 342-2542 or by e-mail at ramster@gkglaw.com.
