Class Action Suit Filed in Hawaii to Declare Jones Act Unconstitutional

Dear gCaptain-

As you know, in and around 1916, Senator Wesley Jones, then a Senator from the great state of Washington urged the adoption of what has commonly referred to as the Jones Act. There are two main “sides” to the Jones Act.

First, as you know, the Jones Act provides a ‘vehicle’ for an injured seaman to be fairly compensated for injuries caused due to the negligence of a fellow crewmember or due to the “unseaworthiness” [“not fit for its intended purpose”] of a piece of equipment.

Second is the “Cabotage” side. It is the Cabotage side of the Jones Act that a new suit has been filed in the United States District Court for Hawaii seeking it held unconstitutional as it applies to Hawaii. I have provided you with a copy, in .pdf format, the Original Complaint (Download .pdf). The case is styled: CV09-00473; KAUA’I KUNANA DAIRY, INC., et al. vs. The United States Government; USDC-District of Hawaii. It was filed October 7, 2009.

To understand the plaintiffs argument, a brief explanation of the Cabotage side is necessary. Simply put, the Jones Act requires that if persons or property are going to be transported from one U.S. port to another U.S. port, it must be done by a vessel (1) manufactured in the United States; (2) by a United States flagged vessel and (3) by a United States crewed vessel. The plaintiffs’ argument boils down to this: (1) Hawaii receives 90% of its products via water transportation; (2) there are two main companies qualified and equipped to service the island (Matson Navigation and Horizon); and (3) that these two companies have engaged in “price fixing” causing their wholesale prices for items to be more inflated due to the requirement to utilize these two companies to satisfy the Jones Act.

In the Complaint, the plaintiffs’ counsel, goes into an elaborate demonstration that demonstrates that the two companies increased their surcharge in similar manners thereby trying to show a ‘pattern’ that has caused the shipments to go up monetarily over the years.

The first hurdle, the plaintiffs’ counsel are going to face is the certification of this as a “Class Action”. There are quite a few obstacles that may stand in the way of class certification. To me, it is not essential that it be certified as a class as any law, if it is unconstitutional as to one “citizen” should not withstand judicial scrutiny. I think the main reason to “add plaintiffs” may be either for ‘political’ reasons or to get more attorneys; fees at the end [or perhaps both].

The next hurdle, and to this writer, the fatal hurdle is that the state of Hawaii came into existence as a state after the enactment of the Jones Act and it accepted the laws of the United States that were then existing.

The Jones Act has been tested in the past and, each and every time, it has been upheld. Very recently there was a decision by the Fourth Circuit that allowed a U.S. tanker that was given a double-hull in China the graces to engage in coastwise trade under the Jones Act; so there has been a fraction of erosion of the Jones Act but, overall, it has been judicially supported. I believe rightly so. Our Jones Act is not the only country that has similar statutes, e.g., Nigeria, the European Union, etc. It serves an important purpose and I believe, especially in the age of terrorism, needs to be strictly enforced not only to protect the US ship builders and U.S. mariners but the sanctity of our U.S. ports.

Finally, this writer is unclear why the plaintiffs have not sued the actual companies if they believe they have been injured as a result of price fixing. I do not believe the District Court will find the Jones Act unconstitutional; I do not believe the Ninth Circuit will find it unconstitutional and I do not believe the United States Supreme Court will accept a writ of certiorari. But, there is no question that this will be interesting to follow…….

Steve Gordon

Steve Gordon
Gordon & Elias, L.L.P.
Maritime Lawyer