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case number 25, 1104 Evergreen Shipping Agency of America Board and Evergreen Line Joint Service Agreement petitioners versus Federal Maritime Commission in the United States of America.

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Mr. McGovern for the petitioners and Mr. Huey for the respondents.

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You may proceed.

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Thank you, Your Honor.

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Good morning.

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May it please the court, Robert McGovern, for the Evergreen Ocean Carrier Petitioners.

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This case is before this court for a second time.

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The first time around, the court found the FMC ignored key facts and failed to properly analyze the financial incentive of Evergreen's detention charges.

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They remanded the case back to the agency to make a circumstantial fact-bound inquiry that both the Shipping Act and the FMC's interpretive rule requires.

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Following remand, the FMC elected not to conduct any additional fact-finding.

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After now agreeing that the charges did financially incentivize... Did you request additional to supplement the record?

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On remand, Your Honor, we didn't request an additional.

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Why are you faulting the agency for not giving it?

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We frankly, given the lack of the factual record, had just expected that the agency was going to do additional fact-finding, particularly given the fact that there were questions from the court about the factual record in Evergreen 1.

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Well, the last paragraphs of Evergreen 1 lay out specific directions that do not include revisiting the facts.

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Your Honor, I'm not aware of that.

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There were facts that were in the record.

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There were findings that the court suggested were not there.

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But there was already a record.

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And you didn't ask for anything more to be done.

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So there was a record the agency could plug fun and make a new package of findings, which is what I think they tried to do.

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Your Honor, if the FMC's position is that the substantial evidence in the record supports its conclusions, for example, in its specific incentive analysis that TCW did everything it could to get the container back and that there was a plan closure, then it was up to the commission to supplement its factual record because simply the facts on both of those two

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critical issues that it needs to support its conclusion are not there.

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Those were allegations and part of a sworn complaint.

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The SCO credited them.

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There was no rebuttal evidence put in by you.

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And this was discussed in the appeal of Evergreen 1 and resolved.

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Never a kid became part of the resulting opinion.

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Apparently, the court took that as sufficient explanation.

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Well, the SCO actually never made any findings of facts on those issues.

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They accepted the allegations.

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They accepted the conclusory allegations without any supporting facts.

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But importantly, the SEO listed 38 specific facts that it did find in the order in the proceeding below.

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But none of those facts were listed by the SEO in those 38 facts.

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There was nothing about a plant closure in the SEO's statement of pertinent facts.

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And there was an all that is on the record right now is a conclusory statement from TCW that it did all that it could.

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Isn't that unrebutted?

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It's not unrebutted in two respects, Your Honor.

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First, Evergreen repeatedly, repeatedly in the case below, told the small claims officer and the FMC that there was no support for TCW's claim that they did everything they could.

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Evergreen said repeatedly to the SEO and the FMC,

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TCW is just saying they took all efforts, but they didn't give one single example of a single thing they did.

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So there wasn't a fact to rebut, Your Honor.

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You were given the opportunity to get some discovery on this.

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You didn't take it.

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The way you rebut something like that is with evidence.

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You didn't put in any evidence, rebuttal, or take examination.

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I mean, this ship has sailed.

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Do you have better arguments?

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And they clearly made findings based on what was before them.

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And you had an opportunity to counter it if you thought there was something to say.

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Yeah, there is a fight over whether they could get the equipment back within its first five time.

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And they put in what they thought was enough, and the agency bought it, and you didn't rebut it.

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You kept saying, we're not buying it, but that's not evidence.

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Well, Judge Edwards, I would only submit.

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And the FMC made this point, too, saying this was unrebutted claim.

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The problem here is that there was nothing forever.

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The only person in the position to have any information about the plant closure or any efforts that the motor carrier took to retrieve the container in time to return it before the port closure is TCW.

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All Evergreen could do... You could have asked TCW for what support they have for this, right?

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And they didn't.

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We certainly did, Your Honor.

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Respectfully, we did in the... And I will point to...

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In JA 461, and this is Evergreen's pleadings before the small claims officer, under at the top on page 11, claimant has made all attempts to work with the BCO and ensure cargo and equipment has moved as fluidly as possible.

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This is what Evergreen said.

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Claimant has made no factual showing of precisely what it did to work with the BCOs and to deal with the pandemic.

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Claimants' terse and conclusory allegations are not evidence and do not satisfy claimants' burden of proof.

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If we took that as the key, then there'd be no evidence on either side.

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They didn't put anything in, according to you, and you didn't put anything in, as we all know.

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Again, respectfully, Judge Ginsburg, there isn't anything for Evergreen to put in on what TCW may or may not have done.

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Evergreen has.

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You had the opportunity to seek discovery from them on that.

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That's right.

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And I think one thing to point out on that is only that the case at that point in time was about whether or not the port was closed, not the plant.

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This is now back on remand from the court.

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But I understand the court's position, and I will point out that the FMC has two aspects of its decision.

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what it refers to as its broad incentive analysis, and what it refers to as its specific incentive analysis.

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And I think what we've been talking about here all relate to the FMC's specific incentive analysis.

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And again, Evergreen submits, we don't believe sufficient evidence exists to support the FMC's conclusions.

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However, in what the FMC calls its broad application of the incentive principle, it found that their clear financial incentives were outweighed by a set of generalized concerns it had on free fluidity.

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What's worse is that the FMC has flatly conceded that the test that it used, its new test which has no foundation in the rule, is not based on specific facts as its own interpretive rule requires.

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Instead, it's based entirely on broad hypotheticals that are unsupported and in fact contradicted by the record.

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First, the FMC hypothesizes that if a container is not returned before port closure,

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If it is returned before a court closure, the port might not be able to turn it around because the port might not be working.

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But the facts in this case, the facts on the record in this case show that the Port of Savannah in May of 2020 was open for business.

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It was continuing normal 24-7 operations despite the gates being closed to truckers.

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That's exactly the opposite of the FMC's hypothetical concern in its so-called broad analysis.

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And the FMC also has... Excuse me.

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The gate was closed to truckers?

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The gate was closed.

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So why isn't that the problem?

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The gate was closed to truckers because TCW was incentivized to return the container before it was closed.

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And that's what Evergreen 1 was about.

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And the FMC now agrees that it was so incentivized to return it.

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What the commission was saying is, we understand there is an incentive, and therefore consistent with the incentive principle.

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But it made up a new test that said, notwithstanding that incentive, we're still concerned about overall freight fluidity.

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fluidity and the incentive principle mutually exclusive?

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It's one test, Your Honor.

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In other words, the test in the interpretive rule is what the Commission said.

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When evaluating the reasonableness of a charge, it will evaluate whether or not the charge serves its intended purpose to promote, to have a financial incentive to return the equipment properly, which the Commission has determined in the years that it references in its brief.

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That, all of that,

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prompt return of equipment promotes freight fluidity.

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It's one test.

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The commission inexplicably turned it into two.

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And the FMC also- How so?

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How so?

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What the FMC said is, we don't care about the financial incentive anymore.

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They wrote the financial incentive completely out.

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It's the critical component of the incentive principle.

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And in writing the financial incentive out, what the FMC has done is reached another illogical result by saying, now we don't care about prompt return to equipment.

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In fact, they say that explicitly in their brief.

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They say, it's not about prompt and quickest return anymore.

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It's about overall freight fluidity.

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So what the FMC's new rule essentially says is slower equipment return, slower equipment return that exceeds contractually agreed free time somehow promotes freight fluidity.

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It just doesn't make any sense.

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And when the FMC hypothesized... The commission also, I think, said that there are...

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there are incentives apart from the demurrage or detention operating on the trucker, correct?

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And in this instance, the trucker actually had rented and had per diem payments on some of this equipment, right?

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So it had that incentive, has the incentive to get the equipment used again for a new job.

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Those are, I should think, are universally true.

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The FMC made that argument in Evergreen 1, too.

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If that were the case, if that's the only incentive that mattered, then we don't need detention charges, right?

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Detention charges have existed in this industry for decades.

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They've existed because all parties agree that those charges provide an important financial incentive to get an empty container back so that the empty— In addition to the other incentives.

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Right.

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And the other incentives, though, are not part of the FMC's rule.

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Again, the FMC is just making it up.

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But it did say on remand, in the opinion on remand, it did say there are other incentives working on the truckers.

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And those would be true inherently in every instance to get the equipment used again.

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Plus the backpack in this instance, this particular one, is rented equipment.

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And that's fair enough, except then that doesn't permit the FMC to ignore its own rules to say that it needs to evaluate whether or not there's a financial incentive to return the equipment.

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Here, on remand, the FMC now agrees there was a financial incentive.

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But the FMC says, we don't care about that financial incentive anymore.

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Now we just care about freight fluidity.

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And in the order of man, the commission recently explained that it did not draft the incentive principle just to promote the quickest equipment return or to merely check the box.

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Of when the return achieve, but rather to advance the broader efficiency of the ocean transportation system.

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So Your Honor, it said that in its brief.

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So the incentive principle says, the interpretive rule rather, says every case needs to be decided on its facts.

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They're fact-specific case, case by case, on these facts.

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The incentive assist was overturned for that very reason, that we're not going to suggest that just because a port is closed, that everybody gets that credit, so to speak.

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Just because of that, you do have to show that you attempted to pick up on time,

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and attempted to return on time with respect to the chases and the shipping container.

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And the point I'm making is not about the cease and desist.

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The point I'm making is the facts in this case show that the port was conducting normal vessel operations.

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The facts show that there wasn't congestion because the port of Savannah was reporting precipitous drop in volumes.

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What does that mean, normal vessel operations when the gates are closed?

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What it means, Your Honor, is that even though the gate is closed, it's not accepting any new containers to come in because the gates are closed to truckers.

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But the port is continuing to work.

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Load and unload those containers, put them on ships.

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Why is that relevant if the trucker can't get in?

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The port gates will be closed, and they had advance notice of that.

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That's right.

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But again, it's relevant in this case, because you start from the point that everybody now agrees that TCW was incentivized to get it there before the closure.

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And there's no dispute about that anymore.

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In other words, get it there on the Friday before it closed.

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what the FMC is saying is it wouldn't have mattered.

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It wouldn't matter because there's so much congestion.

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We're worried about congestion.

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And what the facts in the record show is had they gotten the container there before the gates closed on the Friday, there's no concern at all about congestion in the record.

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And the reason for that is because

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it was a time during COVID where the port of Savannah and the factual record states had a huge drop in demand.

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So really what we're saying is the only reason... You're talking about getting to the gate before it closes to return the container, correct?

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Yes, Your Honor.

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Okay.

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Which they couldn't do because of the previous colloquy we had about Yamaha being closed.

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And again, Your Honor, if

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Our position, Evergreen's position, is that TCW didn't meet its burden of proof to say that it could not have done that.

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And the reason for that is because it said all it did was take all efforts, and it didn't say a single thing that it actually did.

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Yamaha assigned them a pick-up date.

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That's right.

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But Yamaha signed them a pickup time.

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They sent TCW an email on May 21st that said, you can come and pick your container up on May 23rd.

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Which they did.

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Which they did.

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Did TCW call Yamaha and say, my free time has already expired.

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I'm incurring charges now.

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I need to pick that up earlier because I know that the court... It doesn't matter because the best efforts allegation before it was never rebutted, never questioned, you never sought to do anything about it.

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So we have to assume that they made best efforts.

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Maybe they said to Yamaha, can't you do better?

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Maybe they called them a third time earlier on.

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We don't know.

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But they made best efforts.

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Your Honor, if this court believes that TCW did enough, and certainly Evergreen doesn't believe that's the case, but if TCW... Is it a preponderance standard?

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It's a substantial evidence standard, Your Honor.

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And as to that evidentiary piece.

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It is in the, under the FMC's rules, it is a preponderance of the evidence standard.

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The important part for this case is that this is the second time that the FMC has to interpret its own interpretive rule.

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What it's done is done two things in one rule.

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The first is what it called its broad incentive analysis.

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And I'll come back to that in one second if I can.

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What we've been talking about and whether TCW did enough or whether the evidence showed, that's its specific.

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If the court believes that TCW did enough and there wasn't anything that we could incentivize TCW to return it sooner, fine.

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But we have to come back then to the broad incentive analysis because under the way that the commission issued its decision,

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It's issued another Brightline rule that says we don't care whether or not there's a financial incentive to return.

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Now we're going to look at some amorphous and undefined concept of freight fluidity.

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It eviscerates the entire interpretive rule.

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really important still for both Evergreen and the ocean carrier industry, that the commission take a hard look at whether or not the commission did what it said it would do, analyze everything on a case-by-case, fact-specific basis in the interpretive rule, because all they did was rely on hypotheticals.

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They ignored all the facts.

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And all the facts... Do you disagree with the agency's determination that your client suffered no additional costs because of the delay?

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We don't.

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This isn't an issue of cost for my client, Your Honor.

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This is a policy.

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You don't disagree with that?

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That Evergreen did not?

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That was one of the determinations that the agency made.

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One, they couldn't get it there because of a problem with the pickup.

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And two, in addition, there were no costs incurred by you.

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And that was a matter of some consideration for them.

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And they made that determination.

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And you're not disputing that.

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The costs that are involved here are the costs of the disputed days of free time.

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So it's $510, which obviously is not a large amount, but those are the costs that are involved in the case.

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But the potential impacts of the FMC's decision on costs on these types of charges moving forward are quite enormous.

[00:17:41] Speaker 05:
Hasn't that been truncated by legislation now?

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Has it been truncated?

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It has not, Your Honor, no.

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The stakes have not been changed.

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My legislation?

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Well, the stakes were high to begin with.

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And I don't believe if you're referring to OSER 22, which amended the Shipping Act, the stakes are still the same.

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They're still quite high.

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OSER 22 didn't change any of these issues.

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What are you considering the presidential effect?

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Because again, the cease and desist order was reversed.

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So that left in place essentially a case-by-case fact intensive inquiry.

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And the precedent that's being said is the commission did the exact opposite.

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The precedent that's being said here is the commission said, we understand the facts in this case are that there's a financial incentive and we understand that the rule says that we're going to evaluate.

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We also understand that the port was closed and that they understand that TCW did all that to kill it.

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So that's their case by case determination.

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The precedent that's being set here is that anytime now that there is a financial incentive, the commission can just say, we don't care about that anymore.

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We're just going to worry more about free fluid.

[00:18:59] Speaker 03:
That's not the way it comes across in the record.

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It looks like a case in which the person who is being charged with owing some money says, I couldn't get the equipment in time

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to be able to make it back in time.

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And we all had notice in advance that the place was closed.

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So even if I had gotten it there, it couldn't have been received.

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And there was no financial loss on your side.

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That's a very limited, if I were a lawyer in the future, that's a very limited set of findings.

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That's it.

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That's all this case says.

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And your honor case would change if there was some financial losses, the case would change if the attorney on the other side showed they're fabricating when they say they couldn't have picked it up because they put up, they could have picked it up.

[00:19:50] Speaker 03:
So they'd lose in that case or the case would change if they shows.

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In fact, the place was not closed.

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It was open and business was happening.

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It's a very limited holding.

[00:20:01] Speaker 02:
Your honor, that's true.

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But on the other hand, a limited holding with very potential significant precedent being set.

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For example, how could, under the substantial evidence, a trier of facts say that we understand exactly what TCW did in order to retrieve the container when TCW didn't say they did anything at all?

[00:20:25] Speaker 04:
But in the next case, perhaps Evergreen

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or Yamaha or whoever else is participating would have some information to rebut.

[00:20:35] Speaker 04:
I think what we're saying here is this is what this judge saw in this particular case and limited this decision to here.

[00:20:44] Speaker 04:
In the next case, perhaps there will be some rebuttal evidence about someone's efforts.

[00:20:48] Speaker 02:
Well, Your Honor, two things on that.

[00:20:50] Speaker 02:
Number one, if Evergreen had an opportunity to rebut the case even now, we wouldn't have any information to be able to rebut with, because it's not our information.

[00:21:01] Speaker 04:
Because we didn't do any discovery to get information about specifically when a container, the agreement went into place, when there was the decided time upon pickup, how was the free time utilized, et cetera.

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Your honor, the Federal Maritime Commission constantly blames Evergreen for the glaring factual deficiencies.

[00:21:22] Speaker 02:
TCW had the burden of proof, not Evergreen.

[00:21:24] Speaker 02:
TCW had the burden of proof that a fact was more likely to have occurred than not.

[00:21:29] Speaker 02:
How could they possibly have met that burden of proof by saying we did everything they could, but not saying a single thing that they did?

[00:21:35] Speaker 02:
It wasn't Evergreen's burden of proof, and it is an Evergreen's job.

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It's the commission's job to tie facts and make a rational basis between the facts and the decision.

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Without the facts, the commission couldn't do it.

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So understanding that... See, the problem for you is you're omitting your omission.

[00:21:54] Speaker 03:
And they say, you're suggesting that it's not substantial evidence for them to come in and say, we knew we had to pick up by X-Day.

[00:22:02] Speaker 03:
We weren't able to do it.

[00:22:05] Speaker 03:
You were not able to do that.

[00:22:07] Speaker 03:
They were not available.

[00:22:08] Speaker 03:
And we did everything that we could.

[00:22:10] Speaker 03:
That's what they put on the record.

[00:22:12] Speaker 03:
So you're saying that can't be substantial evidence.

[00:22:14] Speaker 03:
Could be.

[00:22:15] Speaker 03:
And if it is, then you've got a problem because you didn't try and rebut it.

[00:22:19] Speaker 03:
It's easily rebutted if they're fabricating.

[00:22:24] Speaker 03:
You put their person in deposition and you ask the right questions.

[00:22:29] Speaker 03:
And if they're fabricating, they're playing games, you ought to be able to break that down.

[00:22:33] Speaker 03:
You're a good attorney.

[00:22:34] Speaker 03:
You'd break that down a couple of minutes, right?

[00:22:36] Speaker 03:
If they're fabricating, it's not even going to be a challenge.

[00:22:40] Speaker 02:
Your Honor, I understand the questions.

[00:22:44] Speaker 02:
I would leave you with this.

[00:22:47] Speaker 02:
Let's say, again, TCW was the one that had the burden of proof.

[00:22:51] Speaker 02:
So now it seems as though we're blaming Evergreen for not engaging in further discovery.

[00:22:58] Speaker 03:
Well, it's not a matter of blame conflicts, whether what they offered was substantial evidence.

[00:23:02] Speaker 03:
What we're suggesting is that it can be seen as substantial evidence.

[00:23:06] Speaker 03:
Yes, if you're looking at substantial evidence going to work against you, yes, you have an obligation to stand up and say, wait, I have to take some deposition here because this is all made up and I can't leave the record like that.

[00:23:19] Speaker 03:
So if we get back to the Court of Appeals, I'm going to be able to say this is all fabrication.

[00:23:24] Speaker 02:
Your Honor, I try to leave you with this.

[00:23:27] Speaker 02:
I know I'm well over time.

[00:23:28] Speaker 02:
I would just say, let's say that I had a brief that was due to this court at 1159, and I called the clerk and I said, I did everything that I could to file, but I'm late.

[00:23:40] Speaker 02:
Would the clerk just take that at face value?

[00:23:41] Speaker 02:
Would the clerk's first question be, well, what did you do?

[00:23:44] Speaker 02:
What was the problem?

[00:23:45] Speaker 02:
That should have been the FMC's first question.

[00:23:48] Speaker 02:
That should have been the FMC's first question because particularly because Evergreen said over and over again in his pleadings that TCW didn't meet its burden of proof.

[00:23:56] Speaker 02:
I understand that Evergreen would have done additional discovery, but that doesn't absolve TCW from its initial burden of proof, and it doesn't absolve the FMC from knowing the facts.

[00:24:07] Speaker 04:
How does the pandemic relate into this?

[00:24:09] Speaker 02:
The pandemic is related in the fact that the port was closed during that weekend because volumes were down.

[00:24:20] Speaker 02:
So it doesn't actually and it relates that not make it a unique situation.

[00:24:25] Speaker 02:
It is a unique situation.

[00:24:26] Speaker 04:
But I mean, a port closure could be back specific then to this case.

[00:24:30] Speaker 02:
except that the FMC didn't apply those facts to this case.

[00:24:34] Speaker 02:
The FMC just said, we're concerned about congestion.

[00:24:37] Speaker 02:
Actually, that's the opposite, right?

[00:24:39] Speaker 02:
There wouldn't be congestion because COVID said that the volumes were way down.

[00:24:43] Speaker 02:
So the FMC ignored those facts.

[00:24:44] Speaker 02:
It just made an assumption.

[00:24:45] Speaker 04:
Or took into account that the ports just need to be closed.

[00:24:50] Speaker 02:
that the ports need to be closed?

[00:24:52] Speaker 04:
Yeah, during that time.

[00:24:53] Speaker 02:
But they weren't, Your Honor.

[00:24:54] Speaker 02:
I guess the important part is the facts in the case show that the port was open.

[00:24:59] Speaker 02:
It was moving containers.

[00:25:01] Speaker 02:
And the FMC said, we don't want new TCW to return this container.

[00:25:04] Speaker 02:
Even though under our rule, under our incentive principle, it financially incentivized you to do it, we still don't want you to do it because we're worried about congestion, even though there wasn't any congestion.

[00:25:14] Speaker 02:
And we're worried about the fact that people aren't working at the port.

[00:25:17] Speaker 02:
But they were working at the port.

[00:25:18] Speaker 02:
The FMC just ignored both of those facts.

[00:25:20] Speaker 02:
So even if this court believes that TCW did enough, the FMC's broad analysis in its rule is what the industry is very, that's the precedent that we're concerned about.

[00:25:32] Speaker 02:
Because what that says is the FMC can ignore the facts, which is completely contrary to what it said it would do in the interpretive rule, and just make up freight fluidity arguments to reach whatever conclusion they want.

[00:25:43] Speaker 02:
So there's two issues going on.

[00:25:44] Speaker 04:
We'll give you some time and rebuttal.

[00:25:45] Speaker 04:
Thank you.

[00:26:07] Speaker 04:
Thank you.

[00:26:08] Speaker 01:
Good morning.

[00:26:08] Speaker 01:
May it please the court.

[00:26:09] Speaker 01:
I'm Chris Huey with the Federal Maritime Commission for the respondents.

[00:26:13] Speaker 01:
I'd like to jump right in and address several of the discussions that were happening with Evergreen.

[00:26:20] Speaker 01:
So where Evergreen says that the commission needed to do more fact finding and needed to ask more questions, I just want to point out that this is an adjudicatory proceedings, quasi-judicial proceeding.

[00:26:32] Speaker 01:
And the obligation is on the litigants before the agency to bring forward evidence, not to sit back and expect the agency to do their work.

[00:26:41] Speaker 03:
Yeah, but the parties have burdens of proof.

[00:26:42] Speaker 03:
Their argument, come on, be fair to them.

[00:26:45] Speaker 03:
Their argument, this wasn't their burden of proof.

[00:26:47] Speaker 03:
If the claim is being made, we couldn't get the equipment.

[00:26:52] Speaker 03:
That's a very viable argument.

[00:26:54] Speaker 03:
argument in TCW's hands if they have it to make.

[00:27:00] Speaker 03:
And what they're saying is, yeah, we heard them say that, but didn't say anything to show that they did everything that they could.

[00:27:07] Speaker 03:
to get it.

[00:27:08] Speaker 03:
They offered no proof other than to say we did the best we could.

[00:27:11] Speaker 03:
Now, you know, in all the cases I've seen where substantial evidence is an issue, that may or may not pass.

[00:27:19] Speaker 03:
Now, we're beating up on the other side for saying, you know, it doesn't matter.

[00:27:22] Speaker 03:
An attorney will always break that down because you don't want to have that standing there unchallenged.

[00:27:27] Speaker 03:
But the other side of that, if it's standing there and nothing else is said and the agency merely says there's substantial evidence because they said they did the best they could,

[00:27:37] Speaker 03:
What does that mean?

[00:27:40] Speaker 01:
Thank you for asking that, Judge Edwards.

[00:27:43] Speaker 01:
In the brief before this court, the commission at page 31, note 7, suggests that Evergreen has actually waived its ability to even contest this evidence before the court.

[00:27:55] Speaker 01:
The reason for that, and this is something that Evergreen skips over in its presentation,

[00:28:01] Speaker 01:
After the small claims officer issued an initial decision, the commission determined to review the proceeding, full commission review, and it directed briefing to happen.

[00:28:13] Speaker 01:
And in addition to what's already been mentioned, which is that in two different sets of discovery requests, Evergreen didn't ask anything about this issue.

[00:28:23] Speaker 01:
In the brief that it filed for the commission, it addressed

[00:28:28] Speaker 01:
maybe addressed this in two sentences, which didn't really constitute an argument and didn't impeach the evidence or the SCO's finding.

[00:28:40] Speaker 01:
At that point in the proceeding, the small claims officer had already waived the evidence.

[00:28:45] Speaker 01:
And it's in the published decision that the small claims officer credited the statement from TCW that was sworn and the exhibit that it supplied to show that it couldn't get the container prior to the Saturday.

[00:28:57] Speaker 03:
So that was out.

[00:28:59] Speaker 03:
Sorry.

[00:28:59] Speaker 03:
What is the alleged uncontested evidence that we did the best we could or we couldn't get the container or what?

[00:29:07] Speaker 03:
It really matters.

[00:29:09] Speaker 01:
Both.

[00:29:09] Speaker 01:
I think it's both, sir.

[00:29:11] Speaker 01:
So they did say that they made best efforts and that was sworn.

[00:29:16] Speaker 03:
That tells you and I, if you were being honest,

[00:29:20] Speaker 03:
If you went home tonight and talked to the family, you'd have to say, Judge, I wasn't right.

[00:29:24] Speaker 03:
That doesn't really say anything.

[00:29:25] Speaker 03:
We made best efforts.

[00:29:28] Speaker 03:
Tells me nothing.

[00:29:29] Speaker 03:
OK.

[00:29:29] Speaker 03:
What else do you think they said?

[00:29:32] Speaker 01:
That they could not get the container until the Saturday.

[00:29:35] Speaker 01:
And they provided evidence from Yamaha showing that that was the first availability of the container.

[00:29:40] Speaker 03:
That's the more important evidence.

[00:29:42] Speaker 03:
That's the more important evidence that you're saying is in the record.

[00:29:47] Speaker 03:
They could not get the equipment, and Yamaha has confirmed that.

[00:29:52] Speaker 03:
Is that what you're saying I'll find in the record when I go back and look again?

[00:29:56] Speaker 01:
Yes, that Yamaha provided information showing for this specific container that it was available for pickup on Saturday, not on Friday, not on Thursday.

[00:30:06] Speaker 03:
It would not be available before.

[00:30:09] Speaker 01:
They said it was available for pickup on Saturday.

[00:30:12] Speaker 01:
And TCW understood that to mean that that was the first availability.

[00:30:17] Speaker 01:
Getting back to the waiver part of this, though, I want to note that in their briefs before this court, Evergreen has spent, I think, a combined total of 20 pages on this issue, whereas when they filed a brief with the commission to contest the small claims officer's findings, this was addressed in at most two sentences, and I'm not even sure that they constitute an argument.

[00:30:42] Speaker 03:
What did they say?

[00:30:42] Speaker 01:
They said, and this is a joint appendix page 538.

[00:30:45] Speaker 01:
And it's starting, I think, is at page 531 is where that document starts.

[00:30:52] Speaker 01:
Evergreen never refers to this document, even though this is the document that brought forward Evergreen's arguments to the full commission.

[00:31:00] Speaker 01:
So joint appendix page 538, quote, one would think that claimant would have asserted some due diligence to try to get Yamaha to release the equipment sooner.

[00:31:11] Speaker 01:
No such effort was ever shown."

[00:31:14] Speaker 01:
End quote.

[00:31:15] Speaker 01:
I think, charitably, that's a skeletal presentation of the argument.

[00:31:19] Speaker 01:
I don't think it satisfies the standard of being forcefully presented.

[00:31:22] Speaker 01:
It provides no argument.

[00:31:24] Speaker 01:
It provides no citation to a case, a statute, a regulation.

[00:31:29] Speaker 01:
It's written in the passive voice.

[00:31:31] Speaker 01:
And it's actually described in that document as a fact, not as an argument.

[00:31:37] Speaker 05:
Which fact is it?

[00:31:38] Speaker 05:
I'm looking at the page.

[00:31:39] Speaker 01:
Five thirty eight.

[00:31:41] Speaker 01:
I think it might be five thirty eight.

[00:31:44] Speaker 01:
Yes, sir.

[00:31:44] Speaker 01:
Five thirty eight.

[00:31:50] Speaker 03:
It sounds like as you're reading it, there's even a concession there that they were aware.

[00:31:58] Speaker 01:
Yeah, the preceding sentence claimant essentially admits that the reason for the failure to return the equipment was that it was stuck in the Yamaha facility.

[00:32:06] Speaker 01:
So it's the carryover, sorry, from 537 to 538.

[00:32:10] Speaker 01:
So it's fact number one, as they describe it.

[00:32:15] Speaker 03:
So they're acknowledging that they knew that the claim was being made that the equipment was stuck in Yamaha.

[00:32:21] Speaker 01:
Yes, that's how I would read that, sir.

[00:32:24] Speaker 01:
And again, there's no argument presented there.

[00:32:28] Speaker 01:
There's no counter facts.

[00:32:31] Speaker 01:
There's no statement even that they didn't meet a burden.

[00:32:34] Speaker 01:
There's no explanation of what the burden was.

[00:32:37] Speaker 01:
So that is the full extent of how they brought this issue before the full commission in spite of them knowing full well that the small claims officer had made the finding that she did on this issue.

[00:32:52] Speaker 01:
I wanted to address also, Judge Ginsburg, you had asked whether the statute had changed in a way that might affect this.

[00:32:59] Speaker 05:
So the ocean shipping rule that you issued.

[00:33:02] Speaker 01:
So the one I was going to address is that the Ocean Shipping Reform Act at 46 US code 41310 changed the burden of proof in demerit and detention cases.

[00:33:16] Speaker 01:
And this is not retroactive, so I'm not suggesting that.

[00:33:19] Speaker 01:
But going forward from 2022, carriers have to bear the burden of establishing the reasonableness of detention charges.

[00:33:26] Speaker 05:
And is there direct billing now to the VCO?

[00:33:30] Speaker 01:
You're referring to the rulemaking where the agency tried to determine, so that's back before the agency on remand.

[00:33:39] Speaker 01:
Correct.

[00:33:41] Speaker 01:
So when that rule came out, if it applied to these facts, Evergreen would not have been able to bill Evergreen, but instead Yamaha directly.

[00:33:53] Speaker 01:
But that part of the rule is on remand now, so that's not operative.

[00:33:57] Speaker 01:
And so I think they could bill Evergreen.

[00:34:00] Speaker 01:
Again.

[00:34:04] Speaker 01:
So Judge Edwards, you had asked about loss, whether Evergreen had incurred any loss here.

[00:34:11] Speaker 01:
And I wanted to address that.

[00:34:13] Speaker 01:
So the two justifications for detention charges, as explained in the rulemaking, are one, a penalty purpose to incentivize behavior, in other words, to bring the containers back.

[00:34:26] Speaker 01:
But the second is as compensation for any costs or losses that the carrier might have incurred due to getting the equipment back late.

[00:34:35] Speaker 01:
Evergreen chose in this litigation not to submit any evidence of that.

[00:34:40] Speaker 01:
It's plain as day in the rulemaking.

[00:34:43] Speaker 01:
It's stated numerous times.

[00:34:45] Speaker 01:
that if a carrier is incurring costs or losses because of a late return, it can argue that, it can submit evidence, it can say we need all or a portion of these fees to compensate us for the losses that we're incurring, which might be equipment rental, it might be opportunity costs, there's a variety of things it could be.

[00:35:06] Speaker 01:
Evergreen shows not to submit any evidence on that.

[00:35:09] Speaker 01:
It's mentioned, it's discussed in the commission's order on remand, it's mentioned in our brief, and they don't say anything about it.

[00:35:18] Speaker 04:
What do you contend is the precedential effect of the opinion in response to what Evergreen said?

[00:35:25] Speaker 01:
I think it is very fact specific.

[00:35:28] Speaker 01:
And I think what you were describing, Judge Childs, is describing maybe not quite a unique scenario but a specific set of facts that happened.

[00:35:41] Speaker 01:
I think, correctly took on its adjudicatory function there to look at those facts and say, this was not reasonable under the statute.

[00:35:50] Speaker 01:
It was not reasonable to charge TCW for these specific three days of detention.

[00:35:57] Speaker 01:
And TCW didn't challenge the other days.

[00:36:02] Speaker 01:
And the commission didn't say that it would be unreasonable to charge on the other days, only on the closure days.

[00:36:10] Speaker 01:
So will there be a precedential effect of that in future agency adjudications?

[00:36:16] Speaker 01:
I would assume so.

[00:36:17] Speaker 01:
And I also assume that one would try to distinguish it on the facts.

[00:36:22] Speaker 01:
And then there's also the factor that I mentioned, the burden of proof having now shifted to the carrier.

[00:36:29] Speaker 01:
So that will play into it in a way that I don't know if we know yet what that's going to look like.

[00:36:35] Speaker 01:
But I do view it as a very fact-specific decision.

[00:36:39] Speaker 04:
And what about response to this new test between freight fluidity?

[00:36:44] Speaker 01:
So Evergreen sort of presents this as if the commission simply made this up.

[00:36:52] Speaker 01:
This is an exercise of agency expertise developed over more than a decade of reviewing the issues that have arisen in the industry about merge and detention fees.

[00:37:03] Speaker 01:
The commission's analysis cites back to its rulemaking, which is a very long document and discusses at length the efforts that the agency made to understand and develop an approach to these issues.

[00:37:20] Speaker 01:
So it's not drawn out of thin air in any respect.

[00:37:24] Speaker 01:
And the parts of that discussion that refer to needing to have incentives on both sides.

[00:37:31] Speaker 01:
So in other words, to incentivize not only the entity that is trying to return the equipment, but also to incentivize innovation, maybe different commercial behavior by the entities such as Evergreen that are receiving the equipment.

[00:37:45] Speaker 01:
That's in the rulemaking.

[00:37:47] Speaker 01:
This needs to be a system where both sides are incentivized to lead to the best possible and most efficient outcome with respect to equipment usage in return.

[00:38:00] Speaker 01:
It's not made up at all.

[00:38:02] Speaker 01:
It's an elaboration of the agency's findings and its rulemaking, which is what the agency was tasked with doing on remand from the court.

[00:38:13] Speaker 01:
And the agency fulfilled that obligation.

[00:38:16] Speaker 05:
So the agency says, well, here are the five points that were advanced by Evergreen.

[00:38:26] Speaker 05:
And we don't think that either individually or even collectively that they overweigh the countervailing consideration of freight fluidity.

[00:38:38] Speaker 05:
And then the commission recites them and gives something of a reason for distinguishing it.

[00:38:45] Speaker 05:
Some are pretty good reasons like, well, they say this is in the contract.

[00:38:48] Speaker 05:
Well, the contract is subject to the standards of the INA, of the Shipping Act.

[00:38:55] Speaker 05:
But others just simply say, yes, it's a good point, but it's overweight by the countervailing consideration.

[00:39:04] Speaker 05:
And there's a series of those, I think three out of the five, say, yeah, that's a pretty good point, or it's a reasonable point, but nonetheless insufficient.

[00:39:15] Speaker 05:
How do we evaluate whether that's a valid conclusion?

[00:39:22] Speaker 01:
So I want to start by answering that by pointing out contextually the arguments that the agency was responding to in that section of the remand order drawn from the same document that I was talking about with respect to the evidence.

[00:39:38] Speaker 01:
The arguments are that Evergreen presented to the commission on these points are skeletal.

[00:39:43] Speaker 01:
the question of whether there's a dispute resolution mechanism, which is listed as one of the extenuating circumstances, the regulation goes into why... Has this come up with regards to unequal bargaining power?

[00:40:00] Speaker 01:
No, this is a different section.

[00:40:01] Speaker 01:
There's one paragraph that addresses just the existence of a dispute resolution mechanism.

[00:40:06] Speaker 01:
And that is listed in the 545.5 rulemaking as a potential factor.

[00:40:12] Speaker 01:
But the reg goes through a lot of different things that you can show on that as to why it would suggest reasonableness.

[00:40:23] Speaker 01:
All Evergreen did was say, we have a dispute resolution mechanism, full stop at the end.

[00:40:29] Speaker 01:
It was one sentence.

[00:40:30] Speaker 01:
They didn't explain why their dispute resolution mechanism tends towards reasonableness.

[00:40:38] Speaker 01:
why it meets the criteria that are laid out in the reg.

[00:40:42] Speaker 01:
They literally just said we have one and that's the joint appendix page 541.

[00:40:45] Speaker 01:
The other arguments that it made are similar to this.

[00:40:51] Speaker 01:
They're along the lines of there was free time

[00:40:56] Speaker 01:
So, they put them forward as factors with no elaboration and no argument as to why they would address reasonableness.

[00:41:11] Speaker 01:
Now, I think the commission tried to address these and gave evergreen some credit for having

[00:41:21] Speaker 01:
That's the starting point for what we're looking at here.

[00:41:24] Speaker 01:
They're skeletal and not really vigorously presented.

[00:41:28] Speaker 01:
They are clearly vigorously presented now before this court.

[00:41:31] Speaker 05:
I don't think that's what the commission said by when it rejected them.

[00:41:35] Speaker 01:
No, the commission, I think in the spirit of the small claims process that this is under, it credited these arguments.

[00:41:41] Speaker 01:
But I just want to make sure that I'm clear that when the court looks at how the agency characterized whatever Green said and how it responded to that,

[00:41:52] Speaker 01:
that it's starting from the basis of a very, very basic, unelaborated set of arguments.

[00:41:59] Speaker 01:
The agency didn't say we're not going to consider these because you didn't elaborate on them.

[00:42:03] Speaker 01:
It did consider them, and I think it considered them reasonably.

[00:42:06] Speaker 01:
I think that the conclusion that it drew is discernible.

[00:42:14] Speaker 01:
If I could

[00:42:15] Speaker 01:
refer to an opinion from this court that just came out last week in an aviation case.

[00:42:20] Speaker 01:
I think my understanding of the court's decision was that you don't necessarily have to explicitly assign percentages or something like that to do a balancing test as long as the agency's reasoning

[00:42:32] Speaker 01:
is discernible.

[00:42:34] Speaker 01:
And in this case, I'm suggesting that the agency's reasoning is discernible because it went through these factors, said why they either didn't apply or didn't surmount the unreasonableness that had already been found about these particular charges.

[00:42:51] Speaker 05:
A bit frustrating.

[00:42:53] Speaker 05:
I'm sorry?

[00:42:54] Speaker 05:
A bit frustrating to see simply, well, you know, that's a fair point.

[00:43:00] Speaker 05:
one time after another, but it doesn't amount to enough to rebut the, overcome the counter.

[00:43:10] Speaker 05:
Are you basically asking for the court to say, well, that's the commission's unreviewable decision?

[00:43:20] Speaker 01:
Or maybe the product of agency expertise having looks at, I mean, the reality of several of these arguments is that they're,

[00:43:30] Speaker 01:
basically abbreviated versions of arguments that were raised during the rulemaking proceeding, where the agency addressed, you know, very substantially similar arguments, which are often more elaborated on than is the case here, and found that... These are pretty fact-specific, right?

[00:43:47] Speaker 05:
First, the respondent contends that 21 days of free time should have provided sufficient time for unwrap, and you say, that's all for your loan is not to swap.

[00:43:59] Speaker 05:
I also argue the claimant agreed to the contractual terms.

[00:44:04] Speaker 05:
I think their point on that is actually inclusive.

[00:44:12] Speaker 05:
Dispute resolution, fair or no.

[00:44:15] Speaker 05:
Response further contends the port's closure was scheduled and known in advance.

[00:44:20] Speaker 05:
So, well, that's not disputed.

[00:44:21] Speaker 05:
Advanced and well-published notice of report closures can weigh in favor of the reasonableness of assessing detention charges.

[00:44:29] Speaker 05:
However, this consideration is not dispositive.

[00:44:32] Speaker 05:
It just goes on like that.

[00:44:36] Speaker 05:
Not helpful.

[00:44:39] Speaker 05:
Not very helpful.

[00:44:42] Speaker 01:
I think in reading that in totality, the agency refers back to the larger finding of unreasonableness on the facts of this case wherein TCW simply couldn't return the container before the closure period began.

[00:44:58] Speaker 01:
And none of these extenuating circumstances

[00:45:06] Speaker 01:
suggest otherwise.

[00:45:08] Speaker 01:
So yes, there was free time.

[00:45:10] Speaker 01:
And I want to point out as well that all or nearly all of these are simply characteristics of any shipping transaction.

[00:45:18] Speaker 01:
There's always free time.

[00:45:19] Speaker 01:
There's always a contract.

[00:45:21] Speaker 01:
There's always a dispute resolution mechanism that's actually required now by 46 CFR Part 541.

[00:45:27] Speaker 01:
The only one that doesn't fall into that is advanced notice of closure.

[00:45:32] Speaker 01:
The rest of them are simply routine facts of any shipping transaction.

[00:45:36] Speaker 01:
But nonetheless, the agency addressed them and tried to weigh them again.

[00:45:40] Speaker 01:
Evergreen itself offered no argument about how these weigh into a reasonableness analysis by the agency in its brief before the commission.

[00:45:51] Speaker 05:
So the commission is, you know, helpful addition to say these are all these are standard and will be appear in every case, which I don't think the commission did say.

[00:46:03] Speaker 03:
The council, what my colleague is saying, I mean,

[00:46:07] Speaker 03:
There's a lot of stuff here that's really extraneous, given the test that's being applied and the facts of the case.

[00:46:13] Speaker 03:
There are really three things, as far as I can tell, that ended.

[00:46:17] Speaker 03:
They couldn't get the equipment, credited evidence, that's your argument.

[00:46:21] Speaker 03:
They couldn't get it to be able to deliver in time.

[00:46:24] Speaker 03:
The place was admittedly closed on the three days for which they're being charged.

[00:46:29] Speaker 03:
No dispute on that.

[00:46:31] Speaker 03:
And there were no costs that resulted.

[00:46:34] Speaker 03:
to the charging party.

[00:46:37] Speaker 03:
And that's it.

[00:46:38] Speaker 03:
Why do you have to say anything about the end of it?

[00:46:40] Speaker 03:
It's perfectly reasonable for the agency to say in those circumstances, if those are the factors that show up, that's the end of the discussion.

[00:46:49] Speaker 03:
They couldn't get the equipment.

[00:46:52] Speaker 03:
And the place was closed for the three days that we're talking about, and there were no costs that resulted.

[00:47:00] Speaker 03:
Is there anything more that I'm missing?

[00:47:01] Speaker 03:
You don't need anything more than that, do you?

[00:47:03] Speaker 03:
I'm not blaming you for how it's written, but you don't need anything more than that, right?

[00:47:08] Speaker 01:
Well, I mean, I certainly agree with that analysis and fully endorse it, but the agency was tasked in the Evergreen one decision.

[00:47:18] Speaker 03:
I'm not blaming.

[00:47:19] Speaker 03:
I'm just saying we're talking now.

[00:47:21] Speaker 03:
Now that you look at the case and we think about it, because we have to try to pull it all together.

[00:47:26] Speaker 03:
Is there anything more that I have to worry myself about?

[00:47:29] Speaker 03:
Because right now, those three things seem dispositive to me.

[00:47:36] Speaker 01:
I mean, I certainly agree, Your Honor, that the incentivized conduct couldn't happen because they couldn't get the container until the port was closed.

[00:47:43] Speaker 01:
Yes.

[00:47:49] Speaker 04:
OK.

[00:47:50] Speaker 04:
Enough?

[00:47:50] Speaker 04:
Thank you.

[00:47:51] Speaker 04:
Thank you.

[00:48:03] Speaker 04:
Thank you, Your Honor.

[00:48:06] Speaker 02:
Just a couple of points.

[00:48:06] Speaker 02:
Number one, the agency has asked for deference to its expertise.

[00:48:10] Speaker 02:
Again, we'd point out that the agency was simply wrong about all the hypotheticals in its freight fluidity analysis, so it's not deserving of any deference there.

[00:48:19] Speaker 02:
agencies council also mentioned briefing before the commission.

[00:48:23] Speaker 02:
It's really important to recognize these are two very distinct cases.

[00:48:26] Speaker 02:
Evergreen 1 was about whether the port closure, not the plant closure, that's what Evergreen 1 was about.

[00:48:32] Speaker 02:
Evergreen 1 was with knowledge of the port closure because it was scheduled in advance, was there a financial incentive to TCW to return the container on time?

[00:48:42] Speaker 02:
That's what that whole briefing was about.

[00:48:44] Speaker 02:
The commission opted not to do additional briefing on the plant closure issue.

[00:48:49] Speaker 02:
On the plant closure issue, Your Honor, I want to point out one thing that really kind of shows the inconsistencies in the FMC's order for Your Honor's consideration.

[00:49:00] Speaker 02:
On page 14 of the order, the commission says Evergreen's charges after free time expired on days the port were open were reasonable, but charges on days the port were closed were not.

[00:49:10] Speaker 02:
But this directly contradicts what the FMC's analysis is on pages 12 and 13 of the order, where it says the only thing that mattered was that the plant was closed, preventing TCW from retrieving the container at all.

[00:49:21] Speaker 02:
So under the analysis on page 14 of the order, even though the plant was allegedly closed and the FMC is saying they couldn't get it,

[00:49:28] Speaker 02:
Evergreen's charges on Wednesday, Thursday, and Friday before the port closure were apparently reasonable.

[00:49:34] Speaker 02:
It says so right in the FMC's order, JA765.

[00:49:38] Speaker 02:
But the FMC doesn't explain how the same charge suddenly becomes unreasonable on Saturday, May 23, just because the port is closed.

[00:49:46] Speaker 02:
This internal inconsistency, and this is the FMC's focus on the plant closure and why it didn't get the facts, this internal inconsistency demonstrates that the FMC is really just reverting to its no charges on closed days rule, which this court has already rejected in Evergreen 1 as arbitrary and capricious.

[00:50:02] Speaker 02:
It has no answer to that inconsistency which Evergreen raised in its brief.

[00:50:07] Speaker 02:
On the contracts,

[00:50:10] Speaker 02:
The FMC again, consistent with the rest of the order, Judge Ginsburg, ignores the facts and relies on even more assumptions and finding that the contract negotiations between Evergreen and TCW were somehow unfair.

[00:50:23] Speaker 02:
The FMC starts with a blanket assumption that says that motor carriers in all cases lack bargaining power with ocean carriers.

[00:50:29] Speaker 02:
And then it points to general language in the interpretive rule that says that the FMC is going to closely scrutinize these types of contracts.

[00:50:37] Speaker 02:
But the court already criticized the FMC in Evergreen 1 by saying you can't just simply recite general arguments made in the interpretive rule.

[00:50:44] Speaker 02:
You have to analyze the specific facts of each case.

[00:50:47] Speaker 02:
So what are the specific facts in this case show?

[00:50:50] Speaker 02:
One, that the order doesn't scrutinize these contracts at all.

[00:50:53] Speaker 02:
So the FMC didn't undertake that analysis.

[00:50:55] Speaker 02:
Number two, even though the FMC in its brief tried a post hoc rationalization to suggest that it did, but it didn't.

[00:51:02] Speaker 02:
Number two, in its own words, TCW is one of the largest truckers in the southeast and has intimate knowledge of these transportation contracts.

[00:51:09] Speaker 02:
And probably the most important, number three, TCW never argued that the contract negotiations were unfair or unequal.

[00:51:16] Speaker 02:
It is not in the record.

[00:51:17] Speaker 02:
The FMC, again, like the rest of the order, just made an assumption and ran with it.

[00:51:22] Speaker 02:
To conclude, Your Honor, under the shipping act and the FMC's interpretive rule, reasonableness depends on the facts and must be decided on a case-by-case basis.

[00:51:31] Speaker 02:
And under the APA, the FMC is required to consider all the facts and make a rational connection between those facts.

[00:51:38] Speaker 02:
The FMC has for a second time failed to conduct a proper reasonableness analysis and didn't conduct any further fact finding and instead it made up a new test that's contradicted by its own hypotheticals, the record, and it's based on unsubstantiated claims.

[00:51:52] Speaker 02:
And so without those necessary facts, the FMC could not and did not engage in reasoned decision making.

[00:51:57] Speaker 02:
And so we ask this court to vacate the commission's order on remand.

[00:52:01] Speaker 04:
Thank you very much.

[00:52:02] Speaker 04:
The case is submitted.