Jones Act Carriers Agree to $3.4 Million Settlement Over Price Fixing Claims

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Jones Act shipping companies Sea Star Line and Horizon Lines have agreed to pay a combine $3.4 million to settle claims over their involvement in a price fixing scheme related to government transportation contracts.

Under the settlement agreements, Sea Star Line has agreed to pay $1.9 million, and Horizon Lines has agreed to pay $1.5 million, according to the Department of Justice.

The civil settlements resolve allegations made in a lawsuit filed in federal court in Jacksonville, Florida, alleging that the shipping companies had violated the False Claims Act by fixing the price of government cargo transportation contracts between the continental United States and Puerto Rico.

“Today’s civil settlements demonstrate our continuing vigilance to ensure that those doing business with the government do not engage in anticompetitive conduct,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “Government contractors who seek to profit at the expense of taxpayers will face serious consequences.”

A statement from the DOJ explains the allegations:

The government alleged that former executives of the defendant ocean shippers used personal email accounts to communicate confidential bidding information, thereby enabling each of the shippers to know the transportation rates that its competitor intended to submit to federal agencies for specific routes. This information allowed the shippers to allocate specific routes between themselves at predetermined rates. Among the contracts affected were U.S. Postal Service contracts to transport mail and Department of Agriculture contracts to ship food. Both Sea Star Line and Horizon Lines previously pleaded guilty, in related criminal proceedings, to anticompetitive conduct in violation of the Sherman Act.

The lawsuit, which was filed by former Sea Star Line executive William B. Stalling, was filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery.

The Act also allows the government to intervene and take over the action, as it did in this case. Stallings will receive $512,719 of the recovered funds.

The case is captioned United States ex rel. Stallings v. Sea Star Line LLC, et al., Case No. 3:13-cv-152-J-12JBT (M.D. Fla.).