Krause Marine Towing Corp. v. Ass'n of Md. Pilots

205 Md.App. 194

44 A.3d 1043

KRAUSE MARINE TOWING CORP., et al.

v.ASSOCIATION OF MARYLAND PILOTS, et al.

No. 561, Sept. Term, 2010.

Court of Special Appeals of Maryland.

May 31, 2012.

Allan P. Hillman, Hamden, CT & Donna M.B. King, Towson, MD (Kern Hillman, LLC, on the brief), for Appellant.

Jonathan R. Krasnoff, Baltimore, MD, & James W. Barlett, III, Baltimore, MD (Douglas F. Gansler, Atty. Gen., Richard A. Tabuteau, Semmes, Bowen & Semmes, on the briefs), for Appellee.

KRAUSER, C.J., KEHOE and HOTTEN, JJ.

KEHOE, J.

At the heart of this appeal is an antitrust challenge to the work assignment rules of the Association of Maryland Pilots (the “Association”) as they affect pilotage and tug services rendered to cargo ships in the Port of Baltimore.

Appellants, Krause Marine Towing Corporation (“KMTC”), a company that provides tug services, and Joseph L. Krause, Jr. (“Krause”), a docking master licensed by the Maryland Board of Pilots (the “Board”), filed a multi-count complaint in the Circuit Court for Baltimore City against the State, the Board, the Association, and several individual members of the Association.¹ At trial, the court granted appellees' motion for judgment at the conclusion of appellants' case in chief. Before this Court, only two of appellants' claims remain in dispute: (1) KMTC's assertion that the Association inhibited its ability to compete for tug business in violation of Maryland's Antitrust Act, seeMd.Code Ann., Com. Law (“CL”) §§ 11–201 et seq. (1975, 2005 Repl.Vol.), specifically, CL § 11–204(a) (stating that “[a] person may not ... unreasonably restrain trade or commerce.”); and (2) Krause's claim that the Maryland Pilots Act (the “Act”), seeMd.Code Ann., Bus. Occ. & Prof. (“BOP”) §§ 11–101 et seq. (1989, 2010 Repl.Vol.), infringes upon his right to contract freely.

Appellants present four issues to us. First, KMTC asserts that the trial court erred in granting the Association's motion for judgment on KMTC's antitrust claim. We hold that the trial court did not err because KMTC did not prove that the Association's work rules unreasonably restrained competition.

Second, KMTC argues that the trial court erred in permitting the Association to assert a statute of limitations defense at trial, thus limiting its claim for damages. We need not address this contention because we have decided against KMTC on its antitrust claim. As KMTC concedes, the statute of limitations issue would only be relevant if we decided in favor of KMTC on the merits of this appeal.

Third, Krause contends that the trial court erred in granting the State's motion for judgment on his claim that Maryland docking masters should not be required to be members of the Association. Krause argues that this requirement is an unconstitutional exercise of the State's police power. This contention, as presented to this Court, has not been preserved for appellate review.

Finally, both appellants argue that the trial court erred by failing to issue a declaratory judgment as to their antitrust and constitutional claims. We agree. In disposing of appellants' claims, the trial court failed to enter a declaratory judgment, and we will remand the case to the circuit court for entry of a judgment declaring the rights of the parties in accordance with this opinion.

Background

Overview: Pilotage and Tug Services in the Port of Baltimore

The majority of the relevant facts that fuel this dispute arise from tug boat activities in the Port of Baltimore. The Port is one of the busiest in the United States.² The container, vehicle transport, and bulk carrier ships that use the Port are enormous: they can be more than three football fields long, up to 138 feet wide and can draw nearly 48 feet. These vessels are too large to berth and unberth by themselves; they require the assistance of tug boats to safely accomplish this task.

There are two types of pilots that help guide these maritime behemoths into and out of port. The first are bay pilots (also referred to as harbor pilots), who direct vessels from the open sea through the Chesapeake Bay to the ship's port of destination (and vice versa). S.B. 237 (2000), Fiscal Note at 2.³ The second are docking masters (also called docking pilots), whose primary responsibility is to coordinate and direct the services of tugs to maneuver a ship as it moors and unmoors. H.B. 884 (2004), Fiscal Note at 5. Krause is a docking master; the regulation of docking masters (as opposed to bay pilots) is at the heart of this appeal.

Moving these ships through the Chesapeake Bay to their destination requires tightly planned coordination. Each steamship line that does business in the Port of Baltimore maintains a “ship's agent.” Prior to the arrival of a vessel in the Chesapeake Bay, the ship's agent notifies the Association that a bay pilot is needed to guide the ship to Baltimore. Sunset Review (2001) at 27. As the ship nears its destination, the ship's agent makes arrangements for the mooring of the vessel by notifying the Association that a docking master is required and by contacting a tug company. The Association assigns jobs according to established work rules that provide for rotation among pilots and docking masters. (We will discuss these work rules more fully later).

Three ship-docking tug companies serve the Baltimore harbor: KMTC,⁴ McAllister Towing of Baltimore, Inc., and Moran Towing Corporation. Each company owns a number of tugs that vary in utility for a given job because of size, design and engine power. Either directly or through affiliates, McAllister and Moran provide tug services to numerous commercial ports in the United States. KMTC focuses primarily on the Port of Baltimore. The three marine tug companies compete for business. In contrast, as we will explain, docking masters have a legally-established monopoly for their services and their fees are regulated by the Public Service Commission.

The Disputes

There are two separate claims that we must address in this case. One involves an antitrust claim brought by KMTC against the Association. The other involves a constitutional challenge to the Act brought by Krause against the State. Both claims involve the Association's work rules for docking masters.

The Association's work rules, dated February 2009, were entered into evidence before the trial court. These rules establish a rotation schedule so that each docking master is subject to approximately the same workload. Sunset Review (2009) at 4. Under these rules, docking masters work two weeks on duty and two weeks off duty, and when they are on duty they complete a three-assignment turn. When the three assignments are completed, the docking master returns to the back end of the rotation schedule. Critical to the underlying dispute in this case, when a ship's agent contacts the Association's dispatch unit to obtain a docking master for a ship, the docking master at the front end of the rotation schedule is automatically assigned to that vessel. As a result, steamship lines cannot contract directly with a particular docking master, nor can a docking master control which steamship line he or she serves on a regular basis.

While the three tug companies actively compete for customers and commonly make arrangements with individual steamship lines to provide tug services to that line's vessels, the custom of the industry gives the assigned docking master final say in determining which and how many tugs are adequate for the job. See Cooper/T. Smith, Inc. v. NLRB, 177 F.3d 1259, 1264–65 (11th Cir.1999) (“Once a docking pilot receives the schedule of ships docking and undocking in the port on a given day, he decides the number of tugs that will be needed based upon factors such as the dimensions and power of the ship and tidal conditions.”); Guy v. Donald, 203 U.S. 399, 404, 27 S.Ct. 63, 51 L.Ed. 245 (1906) (describing the pilot, who was a member of the Virginia Pilots Association, as the “sole master of his course” with a free ability “to do what he thought best” and “no duty to obey” advice from fellow pilots). ⁵ If the assigned pilot decides that the tugs provided by a tug company are not adequate for a job, either the shipping line or the tug company must hire additional tugs.

KMTC argues that this setup interferes with its contracts with steamship lines because the system prevents both steamship lines and KMTC from selecting the docking master of their choice. Because neither a steamship line nor a tug company can select its own docking masters, KMTC cannot ensure that the assigned docking master—given the pilot's discretion as to the type and number of tugs necessary for a particular job—will decide that KMTC's tugs are adequate, even though KMTC has a contract with the steamship line.

KMTC asserts that “[t]he prime example” of its problem with the rotation system is seen at the New Ore Pier located at Sparrows Point. It claims that, in 2004, the Association passed a special guideline that caused it to lose work. The guideline stated that vessels with a draft of 44 feet attempting to moor or unmoor at that facility must use at least three tugs, each with at least 3000 horsepower and the ability to maintain a 90 degree angle to the vessel. KMTC asserts that the guideline was adopted because of a dredging project in the area but that the guideline remained in place even after the dredging was completed. KMTC asserts that it does not own three tugs that comply with the guideline and that the requirements listed in the guideline are no longer necessary to safely moor vessels at Sparrows Point. As a result of the guideline, some docking masters have refused to use KMTC tugs at Sparrows Point. As explained by KMTC, if it had the power to bypass the rotation system and select its own pilot, then, in the event the initially scheduled pilot decided that KMTC's tugs did not meet the Sparrows Point guidelines, KMTC could select a different pilot willing to do the job.

KMTC also points to three...