Msc Mediterranean Shipping Company S.a. v. Federal Maritime Commission and United States of America

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued April 4, 2025 Decided June 24, 2025
No. 24-1007
MSC M EDITERRANEAN S HIPPING C OMPANY S.A.,
P ETITIONER
v.
FEDERAL M ARITIME C OMMISSION AND UNITED S TATES OF
AMERICA,
R ESPONDENTS
MCS INDUSTRIES , INC .,
INTERVENOR
Consolidated with 24-1262
On Petitions for Review of an Order
of the Federal Maritime Commission
John Longstreth argued the cause for petitioner. With him
on the briefs were Michael F. Scanlon and Christiana K. Goff.
Paul W. Hughes, Andrew A. Lyons-Berg, and Grace
Wallack were on the brief for amicus curiae World Shipping
Council in support of petitioner.

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Harry J. Summers, Attorney-Advisor, Federal Maritime
Commission, argued the cause for respondents. With him on
the brief was Phillip “Chris” Hughey, General Counsel.
Matthew J. Reynolds argued the cause and filed the brief
for intervenor in support of respondents.
Before: P ILLARD and WILKINS , Circuit Judges, and
EDWARDS , Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge
EDWARDS .
EDWARDS , Senior Circuit Judge: The Shipping Act of
1984 (“Act”), 46 U.S.C. § 40101 et seq, was enacted to “(1)
establish a nondiscriminatory regulatory process for the
common carriage of goods by water in the foreign commerce
of the United States with a minimum of government
intervention and regulatory costs; (2) ensure an efficient,
competitive, and economical transportation system in the ocean
commerce of the United States; (3) encourage the development
of an economically sound and efficient liner fleet of vessels of
the United States capable of meeting national security needs
and supporting commerce; and (4) promote the growth and
development of United States exports through a competitive
and efficient system for the carriage of goods by water in the
foreign commerce of the United States, and by placing a greater
reliance on the marketplace.” 46 U.S.C. § 40101. The Federal
Maritime Commission (“Commission” or “FMC”) is
responsible for overseeing the “common carriage of goods by
water in foreign commerce” under the Act. See Kawasaki Kisen
Kaisha Ltd. v. Regal-Beloit Corp., 561 U.S. 89, 96 (2010)
(cleaned up). As explained below, in addressing alleged
violations of the Act, the Commission has the authority to, inter
alia, receive complaints, pursue investigations, subpoena

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witnesses and evidence, oversee discovery, conduct hearings,
issue orders, issue reparation orders, and seek injunctive relief.
46 U.S.C. §§ 41301-41310. The Shipping Act also authorizes
the Commission to issue regulations outlining discovery
procedures that conform with the Federal Rules of Civil
Procedure. Id. § 41303(a)(2). Pursuant to this authority, the
Commission has adopted regulations making it clear that an
Administrative Law Judge (“ALJ”) may issue an order
“dismissing the action or proceeding or any party thereto, or
rendering a decision by default against the disobedient party”
for failure to comply with discovery orders. 46 C.F.R.
§ 502.150(b)(3).
Carriers and shippers who enter service contracts covered
by the Act must file copies of their agreements with the
Commission. See 46 U.S.C. § 40502(b). The Act specifies
certain essential terms the agreements must contain, id.
§ 40502(c), and the Commission must ensure that certain
regulated entities do not operate in violation of the filed
agreements. See id. §§ 41104(a)(2)(A), 41102(b). The
Commission also ensures that entities do not engage in
fraudulent or “unjust or unfair” practices to obtain non-market
transportation rates, id. § 41102(a), and that common carriers
“establish, observe, and enforce just and reasonable regulations
and practices” related to “receiving, handling, storing, or
delivering property,” id. § 41102(c).
This case emanates from a dispute between Petitioner
MSC Mediterranean Shipping Company S.A.
(“Mediterranean”), the world’s largest container shipping
company, and Intervenor MCS Industries, Inc. (“MCS”), a
shipper. In 2021, MCS filed a complaint with the Commission
alleging that Mediterranean had violated the Act in part by
failing to provide cargo space as agreed, forcing MCS to pay
higher rates on the spot market during the Covid-19 pandemic,

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refusing to deal with MCS, discriminating against shippers
with respect to certain ports, and systematically engaging in
unreasonable business practices.
Mediterranean initially provided some discovery material
to MCS. However, it has since declined all additional discovery
requests because, in its view, the information sought concerns
matters that are unrelated to MCS and its cargo. Mediterranean
has also claimed that the Commission lacks jurisdiction over
this case because the violations raised by MCS’s complaint
involve routine breach of contract claims which are not covered
by the Act.
Mediterranean also asserts that it cannot comply with the
Commission’s discovery orders because its business
documents are generally located in its headquarters in
Switzerland, and Swiss law precludes it from producing
materials in response to discovery orders without first
obtaining Swiss authorization. When Mediterranean attempted,
as authorized by the ALJ, to obtain such authorization pursuant
to the Hague Convention, a Swiss court rejected the request
because it found that administrative proceedings did not fall
within the scope of the Convention. After additional rounds of
requests from the ALJ that Mediterranean produce the
documents in question, or at the very least confirm that they
cannot be produced from Mediterranean’s American
subsidiaries, Mediterranean has continued to stonewall by
reiterating its rejection of the viability of MCS’s claims.
Following multiple warnings, the ALJ ordered Mediterranean
to either produce the documents or show cause why a default
judgment should not be entered against it. After Mediterranean
continued to resist the discovery orders and the Commission’s
jurisdiction, the ALJ issued a default judgment ordering
Mediterranean to pay reparations to MCS. The Commission
affirmed this judgment in part, remanding for the ALJ to

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recalculate the reparations amount and to assess whether
sanctions might also be appropriate for Mediterranean’s delay
of the proceedings. See id. § 41302(d). The Commission then
affirmed the ALJ’s order on remand.
Mediterranean now petitions for review. It contends that
the Commission had no jurisdiction over MCS’s complaint and
that the Commission abused its discretion in issuing a default
judgment because it did not properly justify the action or
appropriately consider alternative sanctions. Mediterranean
additionally claims that the Commission erred in declining to
invoke procedures under § 41108(c)(2) to resolve the discovery
issue in this case. Although the reparations award was the
subject of dispute below, Mediterranean does not challenge
that award here, including whether the Commission erred in
issuing reparations without a jury trial under the Seventh
Amendment of the U.S. Constitution. These issues have
therefore been forfeited. For the reasons detailed below, we
deny Mediterranean’s petitions for review.
I. B ACKGROUND
A. Statutory and Regulatory Background
As discussed above, the Shipping Act regulates overseas
commerce of the carriage of goods. To this end, it imposes
regulatory requirements on ocean common carriers, including
general rate and tariff requirements. See 46 U.S.C. § 40102(7)
(defining common carriers); id. § 40501(a)-(b) (describing
tariff system); see also Sea-Land Serv., Inc. v. Dep’t of Transp.,
137 F.3d 640, 642 (D.C. Cir. 1998) (discussing the statute’s
regulation of common carriers). Agreements between ocean
common carriers must be filed with the Commission, which
may reject agreements that fail to meet statutory requirements.
See 46 U.S.C. §§ 40301(a), 40302(a), 40304(b).

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Relevantly here, the Act also regulates the commercial
relationships between ocean common carriers and the shippers
whose cargo they carry. See id. § 40102(23) (defining
shippers). Ocean common carriers and shippers transact
through service contracts, in which the shipper will commit to
providing a certain amount of cargo over a fixed time period,
and the carrier will in turn commit to transporting such cargo
at a fixed rate. See id. § 40102(21). The Act requires that
covered shippers and carriers file their service contracts with
the Commission, and that the contracts provide for certain
essential terms. See id. § 40502(b), (c).
The Act imposes “[g]eneral prohibitions” on regulated
entities. See id. § 41102. These include obtaining transportation
at a cost below the applicable rates, id. § 41102(a), and
operating contrary to certain filed agreements, id. § 41102(b).
Additionally, this section requires that regulated entities,
including common carriers, “establish, observe, and enforce
just and reasonable regulations and practices relating to or
connected with receiving, handling, storing, or delivering
property.” Id. § 41102(c).
The Act also imposes certain requirements on carriers
specifically. See id. § 41104(a). The statute precludes carriers
from providing transportation at rates below the tariff or
service contract rates by means of false billing, measurement,
classification or “any other unjust or unfair” means. Id.
§ 41104(a)(1). And carriers may not “provide service in the
liner trade that is . . . not in accordance with” a filed service
contract. Id. § 41104(a)(2)(A). Similarly, carriers may not
employ “unfair or unjustly discriminatory practice[s]” or “give
any undue or unreasonable preference or advantage” for
services pursuant to a service contract “with respect to any
port,” id. § 41104(a)(5), (a)(9), and may also not “unreasonably
refuse to deal or negotiate” with shippers, id. § 41104(a)(10).

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Congress has authorized the Commission to enforce the
Act’s provisions through both independent investigations, id.
§ 41302(a), and through adjudications of complaints filed by
third parties, id. § 41301(a). Not all Shipping Act violations
may be enforced by complaints, however. See id.; id.
§§ 41307(b), 41104(b). Relevantly here, the Act provides that,
“[u]nless the parties agree otherwise, the exclusive remedy for
a breach of a service contract is an action in an appropriate
court,” rather than a complaint filed with the Commission. Id.
§ 40502(f).
As discussed above, in adjudicating complaints and
conducting investigations, the Commission has the power to
order discovery, see id. § 41303, to seek injunctive relief, and
to issue reparations orders for injury to parties, see id.
§§ 41305, 41306, 41307. It may also impose sanctions for a
party’s undue delay to the adjudicative proceedings and for
failure to comply with discovery orders, including rendering a
decision by default against the disobedient party. See id.
§ 41302(d); 46 C.F.R. § 502.150(b). The Act also authorizes
the Commission to impose some “additional penalties” on a
common carrier as sanctions for failure to comply with certain
provisions of the Act. See 46 U.S.C. § 41108.
B. Facts
In May 2020, Petitioner Mediterranean, a carrier with
headquarters located in Switzerland, entered into a service
contract with intervenor MCS, a Pennsylvania-based shipper,
to carry MCS’s cargo. Under the parties’ agreement, which was
filed with the Commission, MCS was to offer a minimum
amount of cargo for shipping by Mediterranean from China to
the U.S. at a set rate. The agreement also provided that any
disputes arising out of or in connection with the contract

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between the parties would be settled through binding
arbitration.
The Covid-19 pandemic, and ensuing supply chain
disruptions, complicated this contractual arrangement. MCS
alleges that, starting in October 2020, Mediterranean refused to
allocate the contracted-for space in its vessels to MCS cargo,
and stopped taking cargo from specific Chinese ports.
Nonetheless, in May 2021, MCS renewed its service contract
with Mediterranean, for a reduced amount requirement limited
to fewer ports.
In July 2021, MCS filed a complaint with the Commission,
alleging that Mediterranean had violated the Act when it
provided services outside of the service contracts’ terms, see
46 U.S.C. § 41104(a)(2)(A), and that it had discriminated
against MCS’s cargo in violation of sections 41104(a)(5) and
41104(a)(9), which prohibit discrimination as to ports. MCS
also originally claimed that Mediterranean had engaged in
collusion with other carriers, and listed another shipping carrier
as a defendant, but settled those claims separately and dropped
them as to Mediterranean.
As amended, MCS’s complaint alleges that Mediterranean
took advantage of the supply chain disruptions during the
pandemic to adopt coercive practices that increased carriage
rates, including the practice of “blank sailings” of vessels that
were empty, to “creat[e] artificial scarcity and boost[] prices on
the spot market.” Amend. Compl. ¶ 5, Joint Appendix (“J.A.”)
130. Additionally, according to the complaint, Mediterranean
would sell the contracted-for space in its vessels to other
shippers for a premium, refusing to carry MCS’s cargo or even
to negotiate for the already contracted-for carriage unless MCS
paid a premium outside the contract rates.

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MCS alleges that these systematic practices, which were
also in breach of the parties’ service contract, amounted to
several Shipping Act violations, including: (1) “unjust and
unreasonable practices” in violation of § 41102(c) of the Act,
by failing to maintain or disclose business records; (2)
engaging in services outside of the service contracts filed with
the Commission, which the Shipping Act prohibits under
§ 41104(a)(2); (3) “unfair and unjustly discriminatory
practice” against MCS in violation of § 41104(a)(5), including
by preferencing high-priced cargo; (4) the continuous practice
of giving “unreasonable preference and advantage” to certain
shippers in violation of § 41104(a)(9); and (5) unreasonable
refusal to deal with MCS in violation of § 41104(a)(10).
The amended complaint requested that the Commission
launch an investigation into the alleged practices, and sought
declaratory and injunctive relief, plus reparations for the added
expense MCS incurred as a result of the alleged conduct. In
August 2021, the Commission launched a separate inquiry into
the alleged practices by several common carriers, including
Mediterranean. And Congress has since amended the Shipping
Act to address the supply chain issues caused by the pandemic,
including conduct of the sort that MCS alleges took place here.
See Ocean Shipping Reform Act of 2022, Pub. L. 117-146, 136
Stat. 1272, 1274 (June 16, 2022) (adding new violation
provisions forbidding “unreasonably refus[ing] cargo space
accommodations when available” and expanding
§ 41104(a)(10) to include refusals to deal “with respect to
vessel space accommodations provided by an ocean common
carrier”).
Mediterranean’s primary defense to these allegations is that
they are outside of the Commission’s jurisdiction because they
are essentially breach of contract claims, to be settled in
arbitration as provided for in the parties’ agreements.

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Mediterranean contends that these claims do not constitute
valid Shipping Act violations that may be enforced by
complaint. See 46 U.S.C. § 40502(f). Mediterranean has
accordingly initiated separate arbitration proceedings against
MCS.
C. Procedural History
What is primarily at issue before the court in this case is
Mediterranean’s conduct during the course of the
Commission’s adjudicatory proceeding. First, rather than
moving to dismiss MCS’s claims initially, Mediterranean did
not challenge the action before the ALJ until after the case
proceeded to discovery. After Mediterranean had already
produced initial batches of documents, it switched gears and
claimed that it was not required to produce an additional round
of discovery because the requested material did not concern
valid claims under the Shipping Act. The ALJ rejected these
objections and ordered Mediterranean to produce the requested
documentation. See ALJ’s Order Granting Motion to Compel
(Dec. 8, 2021) (“First Discovery Order”), J.A. 78. The order
required that Mediterranean identify, inter alia, individuals
with knowledge of the events in question, produce additional
communications concerning MCS regarding specific
geographic limitations tied to ports between California and
China, and produce information on unbooked space in
Mediterranean’s vessels that it allegedly refused to allocate to
MCS. See id. at 5-13, J.A. 82-90.
Only after this discovery order did Mediterranean file a
motion to dismiss, arguing that MCS had failed to state valid
claims under the Shipping Act and that, as a result, the
Commission lacked jurisdiction over the proceedings that had
been ongoing for six months. MCS then moved to amend its
complaint. In February 2022, the ALJ denied Mediterranean’s

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motion to dismiss and granted MCS’s motion to amend. The
ALJ also ordered the parties to report on how discovery would
proceed, having determined that discovery regarding
Mediterranean’s business practices was relevant to MCS’s
allegations of systemic practices in violation of the Act,
including refusal to deal and discrimination.
Mediterranean continued to refuse to abide by the ALJ’s
discovery order. In the parties’ subsequent joint status report,
Mediterranean argued that the discovery order triggered Article
271 of the Swiss Criminal Code, which requires Swiss
companies to obtain Swiss authorization before they can be
compelled to produce business records located in Switzerland.
See Schweizerisches Strafgesetzbuch [StGB] [Criminal Code]
Dec. 21, 1937, art. 271, para. 1 (Switz.),
https://perma.cc/9GJU-LUZF (last visited June 9, 2025).
Although Mediterranean had never raised this concern in its
opposition to the motion to compel, and although
Mediterranean could have arguably produced these documents
voluntarily without potentially triggering Article 271, MCS
agreed to follow Hague Convention procedures to obtain Swiss
authorization for discovery. Accordingly, MCS and
Mediterranean jointly drafted a Letter of Request pursuant to
the Hague Convention, and requested that the ALJ authorize its
filing with Swiss authorities. The ALJ granted this request.
The Letter of Request authorized by the ALJ specified that
it was to be filed with a Court of First Instance in Geneva. But
the Swiss court in question rejected the request, finding that an
action in an administrative proceeding did not fall within the
scope of the Hague Convention. Mediterranean maintains that
this was a legal error by the Swiss court, and blames MCS for
this outcome, arguing that MCS filed the request at the wrong
venue (despite the order by the ALJ that it be filed there) and

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failed to explain the nature of the proceedings before the
Commission.
The parties then agreed that this dilemma should be
resolved by submitting a second Letter of Request under the
Hague Convention. MCS also recommended that the ALJ
invoke the procedures under 46 U.S.C. § 41108, a Shipping Act
provision requiring, inter alia, that failure to disclose
information that is allegedly protected by the laws of a foreign
country must be raised with the Secretary of State, who will
then seek to resolve the matter with the foreign nation. See id.
§ 41108(c)(2). Although this provision applies only when
certain penalties are being contemplated, see id. § 41108(c)(1),
MCS nevertheless proposed to the ALJ that the next step in
their discovery dispute should be to notify the Secretary of
State, who must then negotiate with Switzerland to resolve this
problem.
The ALJ rejected the suggestion to submit a second Hague
Convention request. Instead, relying on federal caselaw, the
ALJ found that Mediterranean had failed to show that pursuit
of discovery would create a risk of criminal prosecution for
Mediterranean. The ALJ thus determined that Mediterranean
had not shown that Hague Convention procedures were
required. It then ordered, again, that the documents be
produced. ALJ’s Order Requiring Production of Discovery 4
(July 29, 2022) (“Second Discovery Order”), J.A. 208.
Mediterranean has continued to refuse to follow the ALJ’s
discovery orders. It does not allege that the ALJ’s analysis of
federal caselaw was incorrect, but that the Swiss Court’s ruling
was in error. In Mediterranean’s view, pursuit of discovery
involves risk that disclosure of certain records could expose
Mediterranean to criminal liability under Swiss law.
Mediterranean has never proposed to appeal the adverse

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judgment of the Swiss court. Instead, it asked the Commission
for an extension of time so that it could seek a contrary position
from the Swiss Federal Department of Justice and Police, an
agency located within the Swiss executive branch.
At Mediterranean’s behest, the Swiss Federal Department
submitted a “Notice of Advice” stating that, “[c]ontrary to the
decision . . . of the Geneva Court of First Instance, the case is
in fact a civil and commercial matter,” so that the Geneva
Court’s views “ha[ve] no material effect,” and Hague
proceedings must be followed. Decision of Federal Department
of Justice and Police 3-4 (Nov. 7, 2022), J.A. 283-84. The
Swiss Federal Department also interpreted the complaint
before the Commission as a matter concerning the “relationship
between two subjects of private law arising from . . . a
contract” and involving “damages, a typical civil law claim” –
despite the Commission having previously ascertained that the
matter also involves specific Shipping Act violations. Id. at 3,
J.A. 283. The Swiss Federal Department then advised that
Mediterranean could re-file its Hague request, but it declined
to authorize the production pursuant to the already filed
request. Id. at 4, J.A. 284.
In September 2022, the ALJ denied Mediterranean’s
extension request, finding that the Swiss executive branch’s
advice took no position on the merits of the discovery matter at
issue before the Commission. See ALJ’s Order Denying
Motion for Extension and Order to Show Cause (Sep. 8, 2022)
(“Show Cause Order”), J.A. 219-21. The ALJ concluded that
Mediterranean’s arguments had been ruled unavailing by the
ALJ’s prior order, which had already determined that
Mediterranean had never shown that it would face significant
criminal risk by complying with the discovery order. The ALJ
ruled that Mediterranean could not continue to relitigate the

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same issue and further delay the administrative proceeding. Id.
at 2, J.A. 220.
The ALJ then ordered, now for the third time, that
Mediterranean either produce the discovery or show cause why
default judgment should not be entered against it. Id. at 3, J.A.
221. After Mediterranean objected to the Show Cause Order on
the grounds that it had already produced all the discovery it
deemed relevant and that the ALJ had erred when she found
that the complaint alleged valid Shipping Act violations, the
ALJ issued a default judgment against Mediterranean. See
ALJ’s Initial Decision on Default (Jan. 13, 2023) (“Initial
Default Order”), J.A. 286-308. This order was affirmed by the
Commission in relevant part, adopting the ALJ’s conclusions
as to the discovery issue and as to the jurisdiction question. See
Commission’s Order Partially Affirming Initial Decision on
Default 11-24 (Jan. 3, 2024) (“Commission’s First Default
Order”), J.A. 314, 324-37. The Commission then remanded the
matter for the ALJ to determine whether the default could be
supported by additional statutory grounds of delay to the
proceedings under 46 U.S.C. § 41302(d). The ALJ did so on
remand, and the Commission affirmed this ground for default
as well. See Commission’s Order Affirming Initial Decision on
Remand (July 16, 2024) (“Commission’s Second Default
Order”), J.A. 457-94. Mediterranean then filed the instant
petitions, challenging both the initial default order and the
Commission’s order affirming the ALJ’s decision on remand.
II. ANALYSIS
A. Standard of Review
We review de novo challenges to the Commission’s
jurisdiction under the Shipping Act. See Landstar Express Am.,
Inc. v. Fed. Mar. Comm’n, 569 F.3d 493, 496-97 (D.C. Cir.

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2009) (reviewing de novo the question of the Commission’s
jurisdiction where it “necessarily depend[s] upon the meaning
and interpretation of” the Shipping Act); see also Loper Bright
Enters. v. Raimondo, 603 U.S. 369, 392 n.4 (2024).
An order of default is generally reviewed for abuse of
discretion. See Webb v. District of Columbia, 146 F.3d 964,
971 (D.C. Cir. 1998). The Commission’s regulations have
incorporated the Federal Rules of Civil Procedure to govern
review of default orders. See 46 C.F.R. § 502.12; FED. R. C IV.
P. 37(b)(2)(A). Under the federal procedural standard, we
assess whether a default order constituted a justified response
within Rule 37(b) by considering three key factors: (1) the
prejudice to the other party, which must present its case without
the ordered discovery; (2) the burden on the tribunal, which
must spend its resources addressing delays caused by
noncompliance with its orders; and (3) the need to deter bad
faith conduct in the future. Webb, 146 F.3d at 971-75. Any one
of these factors can alone be grounds for a default judgment.
Id. at 971.
Additionally, although tribunals have “broad discretion to
impose sanctions for discovery violations,” Bonds v. District of
Columbia, 93 F.3d 801, 807 (D.C. Cir. 1996), our review of a
default judgment as a discovery sanction is “more thorough,”
considering the “drastic” nature of a sanction which “deprives
a party completely of its day in court,” Wash. Metro. Area
Transit Comm’n v. Reliable Limousine Serv., LLC, 776 F.3d 1,
4 (D.C. Cir. 2015) (quoting Webb, 146 F.3d at 971). Thus, a
default judgment is only appropriate as a discovery sanction if
“the litigant’s misconduct is accompanied by willfulness, bad
faith, or fault.” Reliable Limousine, 776 F.3d at 4 (internal
quotation marks and citation omitted). We therefore require
that a lower tribunal sufficiently “explain its decision to award
default judgment instead of a lesser sanction,” even if

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exhausting alternative sanctions is not required. Id. at 4, 7
(internal quotation marks and citation omitted).
B. The Commission Properly Exercised Jurisdiction
Over this Case
At the outset, we reject Mediterranean’s contention that the
instant case falls outside of the Commission’s jurisdiction, and
that the default judgment was therefore beyond the scope of its
statutory authority. Mediterranean argues that because MCS’s
claims are all premised on the service agreements between the
parties, they fall outside the scope of the Commission’s
jurisdiction under 46 U.S.C. § 40502(f), and must instead be
addressed in federal arbitration, as provided for in the
agreements. We find no merit in Mediterranean’s position.
As we have explained, “[p]rivate regulated parties cannot
agree to waive the subject matter jurisdiction of the agency
charged with the statutory responsibility to insure that parties
implement agreements as approved by and filed with that
agency.” A/S Ivarans Rederi v. United States, 895 F.2d 1441,
1445 (D.C. Cir. 1990) (rejecting contention that arbitration
clause in an agreement filed with the FMC divested the agency
of jurisdiction).
Mediterranean correctly notes that Congress did not intend
for the Commission to have jurisdiction over all claims
emanating from disputes regarding service contracts filed
under the Shipping Act. Indeed, the Shipping Act includes 46
U.S.C. § 40502(f), which provides that “[u]nless the parties
agree otherwise, the exclusive remedy for a breach of a service
contract is an action in an appropriate court.” The question is
therefore what distinguishes claims of Shipping Act violations,
which are actionable through complaints filed with the
Commission, see id. § 41301(a), from breach of contract

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claims, which must be litigated in the appropriate court or
forum.
The “best reading of the statute,” Loper Bright, 603 U.S. at
400, makes it plain that § 40502(f) cannot be so broad as to
swallow the Commission’s statutory authority to adjudicate
whole categories of Shipping Act violations that clearly
contemplate Commission enforcement. As we explain below,
both the terms of the statute and the applicable caselaw confirm
this point. See, e.g., A/S Ivarans, 895 F.2d at 1446 (holding that
“parties may not construct an obstacle to the FMC’s right to
enforce the Shipping Acts”).
For instance, § 41104(a)(2)(A) makes it a violation of the
Act for a carrier to “provide service in the liner trade that is not
in accordance with the rates, charges, classifications, rules, and
practices contained in . . . a service contract.” This indicates
that deviation from a service contract may be a violation of the
Shipping Act. See also id. § 41102(b)(2) (making it a “[g]eneral
prohibition[]” of the Shipping Act for regulated entities to
operate “not in accordance with the terms of” certain
agreements filed with the Commission). It is obvious that,
under these provisions, a claim of breach of the parties’ service
contract might overlap with violations of the Shipping Act.
Moreover, the Act broadly allows persons to file
complaints “alleging a violation” of the Act and to “seek
reparations for an injury to the complainant caused by the
violation” – providing relief that sounds similar to a breach of
contract remedy. Id. § 41301(a). Only two subsections of the
entire Shipping Act are expressly exempted from private
enforcement. See id. (limiting a party’s ability to enforce
§ 41307(b)(1) before the Commission); id. § 41104(b) (same
as to § 41104(a)(13)). For all other violations, the Act broadly
allows the recovery of reparations for the injury caused by the

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violation in question. See id. § 41305(b). In fact, the Act
specifically lays out how reparations are to be calculated for
certain specific violations by common carriers. See id.
§ 41305(c)-(d).
Faced with the somewhat paradoxical language of
§ 40502(f), the Commission has devised a test to weed out
claims that, although invoking specific Shipping Act
provisions, are in essence breach of contract claims that fall
outside the Commission’s purview. In Cargo One, Inc. v.
Cosco Container Lines Company, the Commission explained
that
[g]iven the specificity the Shipping Act provides with
respect to the types of complaints a person may not
bring . . . and given the specificity as to types of relief
available for various violations of the Prohibited Acts,
we believe that Congress did not intend that [§
40502(f)’s] “exclusive remedy” language would
nullify the . . . rights of complainants to bring suit on
any matter tangentially or even substantially related to
service contract obligations.
2000 WL 1648961, at *12 (F.M.C. Oct. 31, 2000).
In Cargo One, the Commission expressed a valid concern
that “strict deference” to § 40502(f) might “eviscerate[] other
statutory rights and remedies envisioned by” the Shipping Act.
Id. at *11. To address this issue, the Commission read the Act
to allow complaints alleging claims that are “distinctly within
the sphere of expertise Congress expected the Commission to
utilize,” such as undue discrimination, even if they relate to
provisions in a service contract. Id. at *13. In other words, if a
complaint involves “elements peculiar to the Shipping Act”
and “raises issues beyond contractual obligations,” then it is

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19
presumptively properly before the Commission even if it also
sounds in breach of contract. Id. at *14. On the other hand,
“allegations essentially comprising contract law claims” are
presumptively barred by § 40502(f), unless the complainant
can demonstrate that the claim is “more than a simple contract
breach claim.” Id.
Because all parties here embrace the Cargo One test and do
not dispute its application here, we leave for another day the
question of whether its interpretation of § 40502(f) comports
with the terms of the statute. See Concrete Pipe & Prods. of
Cal., Inc. v. Constr. Laborers Pension Tr. for S. Cal., 508 U.S.
602, 621 (1993) (where the parties did not disagree, the Court
“assume[d] for purposes of [the] case that the regulation [at
issue] reflect[ed] a sound reading of the statute”); cf. Food &
Drug Admin. v. Wages & White Lion Invs., LLC, 145 S. Ct.
898, 915 (2025) (declining to decide antecedent statutory-
interpretation question regarding whether agency action was
consistent with statutory directives because it was not the
subject of the appeal). Thus, assuming that Cargo One is
consistent with the Act, we find that its holding makes clear
that the Commission had jurisdiction here, and the Commission
properly applied its own precedent in addressing the matters at
issue in this case. This is so because Cargo One itself allowed
two Shipping Act violations that are at issue in this case:
allegations of unjust and unreasonable practices in violation of
§ 41102(c), and of unreasonable refusal to deal in violation of
§ 41104(a)(10) – namely, counts I and V of the complaint
against Mediterranean.
Cargo One held that the Commission presumptively has
jurisdiction over, inter alia, four categories of claims:
allegations “involving unfair or unjustly discriminatory
practices, undue or unreasonable preferences, undue or
unreasonable prejudice or disadvantage, and just and

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20
reasonable regulations and practices.” 2000 WL 1648961, at
*15. These claims “are inherently related to Shipping Act
prohibitions and are therefore appropriately brought before the
Commission.” Id. Mediterranean has never disputed these
points from Cargo One. Nor has Mediterranean meaningfully
explained why the Cargo One presumption is rebutted based
on the allegations in the complaint. While Mediterranean
argues that count I alleges no more than an “alleged failure to
perform . . . contractual duties,” Petitioner Br. 27, count I
alleges a systemic pattern and practice of misconduct that
transcends one individual contractual dispute and claims
statutory violations as to other shippers, too. The ALJ thus
appropriately concluded that “[a]llegations in the amended
complaint extend beyond allegations of breach of the service
contract to allege practices that violate the Shipping Act, such
as failing to maintain or provide booking reports,
systematically preferring higher-priced cargo, and coercing
surcharges.” J.A. 123. Put differently, the complaint does not
seek to litigate particular terms of the service agreements, but
rather compliance with the Shipping Act in the course of
performance under the contracts. And Mediterranean’s
opening brief makes no argument specific to count V and thus
cannot rebut the Cargo One presumption as to this claim. As a
result, we find that counts I and V of the complaint state claims
which fall presumptively within the Commission’s jurisdiction
under Cargo One. These claims of unjust and unreasonable
practices and the unreasonable refusal to deal are not actions
that can be fully addressed in a suit for breach of contract.
The Commission’s adoption and application of the Cargo
One standard is hardly surprising. First, as explained above, the
parties do not disagree that the standard adopted in Cargo One
is controlling, so there is no issue on this. Second,
Mediterranean contends that because its service contract
included an arbitration provision, the Commission had no

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21
jurisdiction over disputes involving claims emanating from
contract disputes. Mediterranean is seriously mistaken.
In 1990, before the Commission’s decision in Cargo One,
this court rendered its decision in A/S Ivarans, 895 F.2d at
1441. We held that, regarding the Shipping Act:
Private regulated parties cannot agree to waive the
subject matter jurisdiction of the agency charged with
the statutory responsibility to insure that parties
implement agreements as approved by and filed with
that agency. And just as assuredly, private parties may
not agree to confer such powers on an arbitration
panel. . . . Since Congress clearly envisioned a role for
the FMC to play in investigating and adjudicating
possible violations of the Shipping Acts, we think it
rather extreme to conclude that the FMC “waived” its
statutory obligations simply by approving an
arbitration clause.
Id. at 1445 (first citing Duke Power Co. v. FERC, 864 F.2d 823,
829 (D.C. Cir. 1989); and then citing Swift & Co. v. Fed. Mar.
Comm’n, 306 F.2d 277, 282 (D.C. Cir. 1962)). The
Commission’s approach here was clearly consistent with the
rule from A/S Ivarans that “parties may not construct an
obstacle to the FMC’s right to enforce the Shipping Acts.” A/S
Ivarans, 895 F.2d at 1446.
And, as suggested by our decision in A/S Ivarans and later
explained by the Commission, the Commission may retain
jurisdiction over a complaint even as the parties pursue a
separate resolution to breach of contract claims in arbitration.
See Anchor Shipping Co. v. Aliança Navegação E Logística
Ltda., 2006 WL 2007808, at *10 (F.M.C. May 10, 2006). In
Anchor Shipping, the Commission held that, “[a]lthough the

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22
complainant in [the] case ha[d] already obtained an arbitration
award relating to certain breach of contract allegations, the
Commission [was still] obligated to hear those allegations
particular to the Shipping Act.” Id. The Commission went on
to say that its “statutory mandate outweighs agreements
between two private parties to arbitrate contractual disputes.”
Id. at *12.
Mediterranean contends that the Commission found
jurisdiction below in disregard of administrative precedent. But
Mediterranean’s position finds no meaningful support in the
administrative decisions issued since our holding in A/S
Ivarans and the Commission’s decisions in Cargo One and
Anchor Shipping. See, e.g., Greatway Logistics Grp., LLC v.
Ocean Network Express Pte. Ltd., 2021 WL 3090768, at *3-4
(F.M.C. July 16, 2021) (relying on Cargo One to find
jurisdiction despite § 40502(f) because district courts cannot
address Shipping Act violations even if breach of contract
claims are proceeding before the courts in parallel to
Commission proceedings); Global Link Logistcs [sic], Inc. v.
Hapag-Lloyd AG, 2014 WL 5316345, at *5, *13 (F.M.C. Apr.
17, 2014) (dismissing claims alleging that shipper was entitled
to higher rates where the service contract itself allowed rate
increases at respondent’s discretion, while still affirming that
the Commission had jurisdiction over the complaint); Dnb
Exps. LLC v. Barsan Glob. Lojistiks, 2011 WL 7144017, at
*4-5 (F.M.C. July 7, 2011) (dismissing claims where
complainants expressly claimed breach of contract only, and
“d[id] not allege a violation of the Shipping Act”).
Finally, as noted above, there is no doubt in this case that
counts I and V in the complaint involve matters distinctly
within the sphere of expertise that Congress expected the
Commission to apply to resolve complaints under the Act.
These counts line up squarely with the holding in Cargo One.

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23
The remaining counts are less clear. Count II of the complaint,
for instance, is based on the same Shipping Act provision that
was precluded by the Commission in Cargo One. See 2000 WL
1648961, at *15. But we need not reach the question of whether
MCS has sufficiently stated a claim as to counts II, III and IV,
because even assuming that the Commission lacked
jurisdiction over count II and that MCS failed to state a claim
as to counts III and IV, we would nevertheless sustain the
default judgment based on the Commission’s valid exercise of
jurisdiction over counts I and V. As discussed above, if a
complaint “alleges certain violations that are particular to the
Shipping Act,” the Commission has jurisdiction and must
address the matter. Anchor Shipping, 2006 WL 2007808, at
*10.
The default judgment orders challenged here, and the
reparations awarded, do not depend on the viability of
individual counts. Rather than the merits of MCS’s claims, the
basis for the default judgment was Mediterranean’s conduct
during litigation, specifically its non-compliance with the
ALJ’s discovery orders. And, in any event, Mediterranean has
failed to argue that the default judgment cannot be sustained
based on one claim alone. Therefore, we need only conclude,
as we do, that the Commission properly exercised its
jurisdiction over the proceedings below because counts I and
V of the complaint concern matters that are particular to the
Shipping Act.
C. The Commission Acted Within Its Authority When It
Issued a Default Judgment
Having concluded that the Commission had jurisdiction
over the proceedings in this case, we next consider
Mediterranean’s challenge to the default judgment. The Act
provides that the Commission “may impose sanctions” if it

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24
“determines that it is unable to issue a final decision because of
undue delay caused by a party” to investigative or adjudicative
proceedings. See 46 U.S.C. § 41302(d). Such sanctions may
include “issuing a decision adverse to the delaying party.” Id.
Additionally, Commission regulations provide that an ALJ
may issue an order “dismissing the action or proceeding or any
party thereto, or rendering a decision by default against the
disobedient party” for failure to comply with discovery orders.
46 C.F.R. § 502.150(b)(3). We conclude that the Commission
did not abuse its discretion.
1. Forfeited Argument
In assessing the efficacy of the default judgment, we first
note that Mediterranean has forfeited one of its principal
claims. Mediterranean never contested the standard that the
Commission applied below in rejecting its claim that the Swiss
blocking statute precluded the discovery, which was whether
Mediterranean demonstrated that disclosure of relevant records
would expose it to a genuine risk of criminal prosecution.
Mediterranean did not raise or preserve this issue. Therefore,
we have no occasion to second-guess the judgment of the
Commission on this issue. See Al-Tamimi v. Adelson, 916 F.3d
1, 6 (D.C. Cir. 2019).
The ALJ concluded that Mediterranean had not provided
any evidence of why the specific discovery order would violate
Article 271. Indeed, there was nothing in the record to confirm
that the documents in question were even located in
Switzerland. And the ALJ indicated that Mediterranean had
pointed to nothing to indicate that it faced any real risk of actual
prosecution. Therefore, the ALJ held that Mediterranean had
failed to meet its burden under the applicable law.

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25
The ALJ specifically concluded that Mediterranean had
failed to show that Article 271 “blocks the production of the
documents at issue.” Initial Default Order 9, J.A. 294. In so
deciding, the ALJ defined its “ultimate task” as “‘not to
definitively determine what Swiss law is, but rather to decide
whether the risk of prosecution under Article 271 is so great’
as to warrant a protective order.” Id. at 10, J.A. 295 (quoting
Microsoft Corp. v. Weidmann Elec. Tech. Inc., No. 15-cv-153,
2016 WL 7165949, at *12 n.14 (D. Vt. Dec. 7, 2016)). In
support of this rule statement, the ALJ cited to EFG Bank AG
v. AXA Equitable Life Insurance Co., which observed that the
parties there had failed “to identify a single case in which a
party was found to have violated Article 271 by disclosing its
own documents absent a court order threatening criminal
sanctions” and ruled that “a mere ‘risk’ that Article 271 might
be applied is insufficient to carry [the objector’s] burden.” No.
17-cv-4767 (JMF), 2018 WL 1918627, at *2 (S.D.N.Y. Apr.
20, 2018).
The ALJ’s conclusion is bolstered by cases that further
highlight the principle that the operative question is not
whether disclosure might be unlawful, but rather whether there
is any actual risk of prosecution. See, e.g., In re Air Cargo
Shipping Servs. Antitrust Litig., No. 06-MDL-1775, 2010 WL
2976220, at *2 (E.D.N.Y. July 23, 2010) (“The possibility that
[defendant] will suffer hardship in complying with a discovery
order is speculative at best. Although the defendant cites the
prospect of criminal sanctions if it violates the blocking statute,
it has cited no instance in which such sanctions have ever been
imposed.”); Minpeco, S.A. v. Conticommodity Servs., Inc., 116
F.R.D. 517, 526 (S.D.N.Y. 1987) (“In examining the hardship
on the party from whom compliance is sought, courts also look
at the likelihood that enforcement of foreign law will be
successful.”), cited with approval in Linde v. Arab Bank, PLC,
706 F.3d 92, 110 (2d Cir. 2013). The ALJ also cited to Belparts

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26
Group, N.V. v. Belimo Automation AG, which held that
“[a]long with [its] burden of persuasion, the objecting party
bears a corresponding burden of production,” requiring the
objector to “provide the Court with information of sufficient
particularity and specificity to allow the Court to determine
whether the discovery sought is indeed prohibited by foreign
law.” No. 21-cv-00334 (SALM), 2022 WL 1223018, at *4 (D.
Conn. Apr. 26, 2022) (internal quotation marks and citation
omitted).
Having stated these rules, the ALJ continued to note that
Mediterranean’s Swiss counsel acknowledged a dearth of
prosecutions under Article 271, save one case, which involved
“a non-party providing Swiss banking documents to American
prosecutors building a potential criminal case.” Initial Default
Order 10-11, J.A. 295-96. The ALJ distinguished that case on
its facts. Id. at 11, J.A. 296; see also Alfadda v. Fenn, 149
F.R.D. 28, 35 (S.D.N.Y. 1993) (considering “the infrequency
of prosecution under” the foreign law in assessing “the
likelihood that [objector] would face prosecution” and
concluding that it “is highly questionable”). The ALJ thus
concluded that Mediterranean failed to show cause why a
default judgment should not be issued against it for failure to
comply with the discovery orders, and issued a default
judgment.
Mediterranean neither disputes the standard the ALJ
applied, nor argues that it met its burden under that standard.
We therefore have no occasion to reject or endorse the standard
the ALJ applied. Below, Mediterranean’s Swiss counsel
repeatedly opined as to the “risk of exposure under Article
271,” that is, the “risk of falling within the scope of” the
provision. J.A. 163; see also J.A. 164 (recommending Hague
procedures “[t]o avoid any risk of violating Article 271”); J.A.
165 (under Hague procedures, “U.S. courts and litigants can,

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27
and often do, . . . seek documents located in Switzerland
without risking violating Swiss law”). In fact, Mediterranean
only asked its Swiss counsel to “outline what would be the risks
under Swiss law should it be forced to comply,” as opposed to
assessing the potential for actual prosecution. J.A. 245. Before
the ALJ, Mediterranean similarly contended that it could not
comply “without risk of criminal exposure,” J.A. 213.
However, it never made any credible claims regarding the
genuine probability of prosecution.
Not all illegal conduct, especially that at the periphery of
liability, is charged. This is why the ALJ dismissed the Swiss
counsel’s memos, which concluded only that Hague
procedures were required “to avoid any risk of violating Article
271.” Second Discovery Order 2, J.A. 206 (internal quotation
marks omitted).
It is also noteworthy that Mediterranean never claimed that
the ALJ got the test wrong, and that possibility of a legal
violation alone is the proper lens through which to consider fear
of criminal sanctions, without resort to the likelihood of actual
prosecution. Mediterranean never made that argument, below
or on appeal. Indeed, Mediterranean appears to recognize that
risk of prosecution is the proper standard. See Br. of Petitioner
46 (citing Société Internationale Pour Participations
Industrielles Et Commerciales v. Rogers, 357 U.S. 197, 212
(1958), for the proposition that “[i]t is hardly debatable that
fear of criminal prosecution constitutes a weighty excuse for
nonproduction, and this excuse is not weakened because the
laws preventing compliance are those of a foreign sovereign”)
(emphasis added). Yet, Mediterranean’s briefing and support
do not establish any genuine prospect of prosecution, instead
only asserting something more amorphous: potential risk of
violating the law. See id. at 40 (arguing that “Mediterranean

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28
Shipping would be in criminal jeopardy under Swiss law if it
complied with the discovery order”); id. at 45 (same).
Mediterranean’s failure to contest the ALJ’s formulation
or application of the test precludes a finding that the ALJ
abused her discretion or acted arbitrarily or capriciously. On
the record before the court, there is no basis to find that the ALJ
or the Commission erred in addressing this issue. See Luu v.
Comm’r of Internal Revenue, No. 23-1149, 2024 WL 959876,
at *1 (D.C. Cir. Mar. 6, 2024) (per curiam) (appellant’s failure
to challenge the standard applied by lower court means that it
“has therefore forfeited any challenge to that aspect” of the
lower court’s decision).
2. Mediterranean Is Mistaken in Suggesting that the
Commission Was Obliged to Use the Procedures in
46 U.S.C. § 41108 to Resolve the Discovery Issue
Mediterranean next contends that the Commission erred
when it declined to invoke procedures under 46 U.S.C. § 41108
to resolve the discovery issue in this case. We reject
Mediterranean’s argument. Section 41108 is titled and
principally focused on “additional penalties,” i.e., penalties not
otherwise covered by the Act, that the Commission is
authorized to use to sanction carriers who violate certain
provisions of the Act. As we explain below, § 41108 has no
application in this case because the Commission did not
purport to use any “additional penalties” to sanction
Mediterranean.
First, under § 41108(a), if a carrier violates paragraphs (1),
(2), or (7) of section 41104(a) of the Act, the Commission may
“suspend any or all tariffs of the common carrier, or that
common carrier’s right to use any or all tariffs of conferences
of which it is a member, for a period not to exceed 12 months.”

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29
46 U.S.C. § 41108(a). Subsection (b) then outlines specific
penalties for operating under a suspended tariff. See id.
§ 41108(b).
Second, under § 41108(c), the Commission may impose
additional penalties on carriers that fail to comply with
discovery orders: it may “suspend any or all tariffs” of a carrier
that has “failed to supply information ordered to be produced,”
id. § 41108(c)(1)(A), and “request the Secretary of Homeland
Security to refuse or revoke any clearance” the carrier’s vessel
requires to operate, id. § 41108(c)(1)(B).
Third, if, pursuant to subsections 41108(c)(1)(A) and (B),
the Commission aims to sanction a carrier for failure to supply
information pursuant to § 41108(c)(1), and the carrier “alleges”
that the information or documents sought to be discovered are
located in a foreign country and cannot be produced because of
the laws of that country, “the Commission shall immediately
notify the Secretary of State.” Id. § 41108(c)(2). “[T]he
Secretary of State shall promptly consult with the government
of the nation within which the information or documents are
alleged to be located for the purpose of assisting the
Commission in obtaining the information or documents.” Id.
Fourth, subsections 41108(d) and (e) highlight the
singularly unique role of the “additional penalties” provisions
in § 41108. For starters, § 41108(d) provides that, if the
Commission finds that a carrier “has unduly impaired access of
a vessel documented under the laws of the United States to
ocean trade between foreign ports, the Commission shall take
action that it finds appropriate, including imposing any of the
penalties authorized by [§ 41108].” And, tellingly, § 41108(e)
says that, “[b]efore an order under [§ 41108] becomes
effective, it shall be submitted immediately to the President.

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30
The President, within 10 days after receiving it, may
disapprove it if the President finds that disapproval is required
for reasons of national defense or foreign policy.” It is obvious
that, because suspensions of tariffs and revocations of
clearances are extraordinary sanctions, Congress meant to treat
them differently than other possible sanctions under the Act.
Notwithstanding the foregoing provisions of the Act,
Mediterranean makes the extraordinary claim that the
Commission is obligated to engage with the Secretary of State
pursuant to § 41108(c)(2) whenever a carrier merely alleges
that information or documents located in a foreign country
cannot be produced because of the laws of that country. This
would mean that President of the United States must then act
to approve or disapprove any discovery order, regardless of
whether the order involved the specific penalties under
§ 41108. This is not what the Shipping Act says. Mediterranean
has taken words out of context to support a distorted
interpretation of the statute. We therefore reject
Mediterranean’s entreaty that the Commission erred in failing
to apply § 41108(c)(2) to resolve the discovery issue in this
case.
The Shipping Act makes it clear that, without reference to
any of the provisions in § 41108, the Commission has the clear
authority to sanction carriers that fail to comply with a
subpoena or discovery order. See, e.g., id. § 41303(a) (broadly
authorizing the Commission to subpoena witnesses and
evidence in both investigations and adjudications, without
referencing any foreign blocking statutes as exemptions or
defenses); id. § 42104(d) (authorizing the Commission to issue
specific penalties for failure to comply with discovery orders
in connection with certain actions); see also 46 C.F.R.

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31
§ 502.150(b)(3). Section 41108 does not modify this authority.
Rather, § 41108, as its title and text indicate, is focused only on
situations in which the Commission seeks to impose a unique
sanction in the form of a suspension of tariffs or a revocation
of a clearance required for a vessel operated by a carrier. If the
Commission does not propose to use one of the unique
sanctions authorized by § 41108, then the procedures of that
section of the statute are not in play.
Mediterranean’s reading of § 41108 is far from the best
reading of the statute. Loper Bright, 603 U.S. at 400. Instead,
it plainly contradicts the statutory text and defies basic
common sense, as the Commission observed below. See
Commission’s Second Default Order 23, J.A. 479. Subsection
(c)(2) refers to a carrier’s “defense of its failure to comply with
a subpoena or discovery order,” but only with respect to cases
in which the Commission has proposed tariff suspension or a
revocation of a carrier’s clearance, see id.
§ 41108(c)(1)(A)-(B). Mediterranean acknowledges that no
such sanctions have been proposed here. Contrary to
Mediterranean’s contention, subsection (c)(2) does not exist in
a vacuum: its meaning is necessarily informed by its neighbors.
See Fischer v. United States, 603 U.S. 480, 487 (2024)
(interpreting the textual meaning of a statutory subsection in
the context of the subsection preceding it); Pereira v. Sessions,
585 U.S. 198, 210 (2018) (looking to a “neighboring statutory
provision” for “further contextual support” of a plain text
analysis); see also King v. St. Vincent’s Hosp., 502 U.S. 215,
221 (1991) (drawing inference consistent with plain meaning
from neighboring statutory provisions); Caraco Pharm.
Lab’ys, Ltd. v. Novo Nordisk A/S, 566 U.S. 399, 418-19 (2012)
(same). The procedures in subsection (c)(2) are not in play
because the sanctions in subsections (c)(1)(A) and (B) have not
been applied.

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The specific steps Congress requires the Commission to
follow should it invoke procedures under § 41108 further
bolster this point. As noted above, before the Commission may
impose the penalties authorized in this section of the Act, it
must first consult the President of the United States. 46 U.S.C.
§ 41108(e). This is not a requirement the Act imposes each time
the Commission issues a discovery order. Rather, the Act
broadly authorizes the Commission to request that the Attorney
General seek enforcement of subpoenas and discovery orders
in district court, see id. § 41308(a), and to broadly impose
sanctions for “undue delay caused by a party . . . including
issuing a decision adverse to the delaying party,” id.
§ 41302(d), without any mention of the penalties and defenses
outlined in § 41108(c); see also id. § 41303(a) (providing that
the Commission may issue regulations outlining discovery
procedures that conform with the federal rules of civil
procedure, without referencing foreign blocking statutes or
§ 41108(c)); Fed. Mar. Comm’n v. S.C. State Ports Auth., 535
U.S. 743, 758 (2002) (observing generally that “a party failing
to obey discovery orders” in FMC proceedings “is subject to a
variety of sanctions, including the entry of default judgment”
(citing 46 C.F.R. § 502.210(a); F ED. R. C IV. P. 37(b)(2))).
In this broader statutory context, it would be absurd to
require the Commission to embroil the President and the
Secretary of State in specific discovery disputes each time a
carrier so much as “alleges” that a foreign blocking statute
prevents discovery. Indeed, the proposition that Congress
would bury such an onerous procedural requirement it intended
to apply broadly in a unique statutory provision that is limited
to “additional penalties” contradicts the basic understanding
that “Congress . . . does not alter the fundamental details of a
regulatory scheme in . . . ancillary provisions—it does not, one
might say, hide elephants in mouseholes.” Whitman v. Am.
Trucking Ass’ns, 531 U.S. 457, 468 (2001). Instead, Congress

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33
normally employs clear and specific language when it wishes
to abrogate a broader statutory regime. See Miller v. Clinton,
687 F.3d 1332, 1340 (D.C. Cir. 2012). For example, Congress
has made explicitly clear that several Shipping Act provisions
apply “notwithstanding” other provisions in the Act or other
laws. See 46 U.S.C. §§ 40703, 41104(b), 42105, 42303(c),
46107. Indeed, where it has chosen to not employ such
language, it has explicitly justified its omission. See id.
§ 40705(b). It has included no such language here that would
indicate its intent to override the Commission’s general
discovery procedure provided for in other sections of the Act.
Finally, even Mediterranean’s own conduct throughout
this litigation belies its contention that § 41108(c)(2) applies
here. Mediterranean did not rely on this provision at the outset
of discovery below, and instead originally argued that the
Hague Convention was the only applicable process to address
a foreign blocking statute. After the Swiss court rejected the
Letter of Request, Mediterranean changed its tune. It has since
argued that § 41108(c)(2)’s procedures constitute an
alternative to the Hague Convention, but it says that either
procedure suffices under the Act. This makes no sense because
the procedures under § 41108 are mandatory when in force, as
Mediterranean acknowledges, and nowhere does subsection
(c)(2) discuss the Hague Convention. If subsection (c)(2) were
to apply, it would not be optional. Under Mediterranean’s
interpretation, then, the Hague Convention itself would be
rendered superfluous by § 41108(c)(2). There is nothing to
indicate that this is what Congress intended when enacting
these provisions. In any event, it does not matter because, as
explained above, § 41108 has no play in this case.
On the basis of the clear terms of the statute, we conclude
that the Commission did not act contrary to law when it

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34
declined to follow procedures under § 41108 to address the
discovery issue in this case.
3. The Commission’s Decision to Issue a Default
Judgment Was Not an Abuse of Discretion
The Shipping Act provides that the Commission may issue
regulations outlining discovery procedures that conform with
the Federal Rules of Civil Procedure. 46 U.S.C. § 41303(a).
Pursuant to this authority, Commission regulations expressly
state that an ALJ may issue an order “dismissing the action or
proceeding or any party thereto, or rendering a decision by
default against the disobedient party” for failure to comply with
discovery orders. 46 C.F.R. § 502.150(b)(3). These regulations
incorporate the Federal Rules of Civil Procedure to govern
default orders. See id. § 502.12; FED. R. C IV. P. 37(b)(2)(A);
see also S.C. State Ports Auth., 535 U.S. at 758. In addition, the
Act provides that the Commission may impose sanctions for
delay, “including issuing a decision adverse to the delaying
party.” 46 U.S.C. § 41302(d). The Commission relied on both
authorities for its default orders. Mediterranean does not
meaningfully challenge its reliance on § 41302(d).
Mediterranean has therefore forfeited any claim that this
provision cannot justify the default judgment imposed here,
and the sole issue before us is whether the Commission abused
its discretion in doing so. See Al-Tamimi, 916 F.3d at 6
(“Mentioning an argument in the most skeletal way, leaving the
court to do counsel’s work . . . is tantamount to failing to raise
it.” (internal quotation marks and citation omitted)).
An order of default is generally reviewed for abuse of
discretion, Webb, 146 F.3d at 971. However, we have held that
a default judgment is only appropriate as a discovery sanction
if “the litigant’s misconduct is accompanied by willfulness, bad

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35
faith, or fault.” Reliable Limousine, 776 F.3d at 4 (internal
quotation marks and citation omitted). And in determining the
propriety of a default judgment, we consider three factors: (1)
the prejudice to the other party, which must present its case
without the ordered discovery; (2) the burden on the tribunal,
which must spend its resources addressing delays caused by
noncompliance with its orders; and (3) the need to deter bad
faith conduct in the future. Webb, 146 F.3d at 971-75. Any one
of these factors, alone, may justify a default judgment, but the
judgment “must be based on findings supported by the record.”
Id. at 971.
Mediterranean claims that the default judgment against it
constituted an abuse of discretion because the Commission did
not properly justify its action or appropriately consider
alternative sanctions. We disagree. We recognize, as did the
Commission, that the issuance of a default judgment is unusual.
See Commission’s First Default Order 14, J.A. 327. The
extreme nature of the sanction has militated against its careless
use. In this case, however, the Commission considered the
matter thoroughly and offered compelling reasons why a
default judgment was justified here.
In the past, the Commission has dismissed complaints
when a complainant failed to comply with discovery orders.
See Kawasaki Kisen Kaisha, Ltd v. Port Auth. of N.Y. & N.J.,
2014 FMC LEXIS 36, at *14-18 (F.M.C. Nov. 20, 2014). It has
also imposed sanctions such as the drawing of adverse
inferences where a respondent refused to produce discovery,
see Jamteck Int’l Shipping, Inc, 2009 FMC LEXIS 42, *6-7
(ALJ July 27, 2009). The Commission has never previously
issued a default judgment when a respondent failed to comply
with discovery orders. But it has certainly never abjured the
possibility, especially not in a case like this one in which the
Commission finds that all three Webb factors – prejudice to the

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other party, burden on the tribunal, and the need to deter bad
faith conduct in the future – are implicated. It appears that the
Commission has never encountered a case like this before, one
in which a respondent has been granted multiple opportunities
to comply with the same discovery request, and where the
party’s response to the ALJ’s and Commission’s orders
reflected a disregard for the agency’s binding rulings. On this
record, we hold that the Commission’s interests in preserving
the integrity of its procedures and in deterring similar dodging
by the same or similar parties in the future justified the issuance
of the default judgment.
The Commission affirmed the ALJ’s initial default
judgment as a discovery sanction. It did so in a thorough
ten-page analysis, going through each of the three Webb factors
as the ALJ had already done in the Initial Default Order. The
Commission’s decision is indeed compelling.
As to prejudice to MCS, the Commission found that
Mediterranean’s refusal to produce the requested discovery had
stalled the litigation, precluding MCS from pursuing its claims.
But more salient here is the harm to the Commission’s
adjudicative system. As the Commission explained,
Mediterranean’s refusal to comply with the ALJ’s orders not
only resulted in delays that “disrupted FMC business and
burdened the FMC docket,” but also “harm[ed] the FMC’s
adjudicatory system by undermining its authority.”
Commission’s First Default Order 19-20, J.A. 332-33. The
record amply supports this conclusion: Mediterranean
repeatedly asserted grounds for not complying with the
Commission’s orders that the Commission had itself already
rejected, including that the complaint did not state Shipping
Act violations, that Hague procedures were required, and that
it faced a material risk of criminal prosecution despite opinions

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from Swiss authorities that made no practical evaluation of
such risk.
The Commission also explained how Mediterranean’s
actions imposed undue burdens on the tribunal, causing the
ALJ and the Commission to spend its resources addressing
delays caused by Mediterranean’s noncompliance with its
orders. Indeed, Mediterranean’s actions reflected a certain
cavalier attitude with respect to applicable procedures and the
law of the case when it routinely disagreed with binding orders
and determinations. In its response to the Show Cause Order,
for instance, it asserted that a default judgment would be an
overreaction because Mediterranean has already “produced
what it believes to be” all the relevant documentation in this
case, despite the Commission’s explicit findings that the
additional discovery was central to MCS’s claims and must be
produced. Respondent’s Response to Order to Show Cause 13,
J.A. 227. Rather than answer the questions regarding whether
the documents in question are located in Switzerland (which it
has never done), Mediterranean refused to comply with
discovery orders because it disagreed with the ALJ’s rulings as
to the viability of MCS’s claims and the relevance of the
discovery to those claims.
The lack of any attempt by Mediterranean to explain
whether the documents in question are located in Switzerland
rather than in the offices of its American subsidiaries, and to
specify any steps Mediterranean had taken or could take to
identify those documents allegedly located abroad, left the ALJ
and the Commission with the impression that Mediterranean
might be “refusing to provide the discovery because it
disagrees with the findings related to the Commission’s
jurisdiction and the scope of these proceedings,” rather than
because the Swiss blocking statute truly prevented its
compliance. Commission’s First Default Order 20, J.A. 333.

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But the ALJ’s and the Commission’s adjudicatory
determinations as to these questions are not opinions for
Mediterranean to take or leave, as it prefers. The ALJ had
already determined that the Shipping Act claims here are
viable; that the requested documents are relevant and must be
produced; and that a party objecting because of foreign
blocking statutes must demonstrate that the documents are
located abroad and that it faces a genuine risk of criminal
prosecution. Mediterranean can appeal these determinations,
but it cannot simply disregard them or use them as grounds for
disobeying additional Commission orders. See Lever Bros. Co.
v. United States, 981 F.2d 1330, 1332 (D.C. Cir. 1993)
(discussing the “law of the case” doctrine).
Against this record, it was reasonable for the Commission
to find that Mediterranean’s actions undermined the agency’s
authority, and that default judgment was the only appropriate
sanction to deter similar stonewalling in the future.
Mediterranean is a repeat player in adjudications and
investigations by the Commission. Moreover, Congress has
tasked the Commission with handling the regulation of
overseas commerce, which necessarily involves the laws of
foreign nations, including multiple foreign blocking statutes.
As the Commission explained, “permitting FMC-regulated
entities to subject ordinary FMC discovery proceedings about
U.S. shipping activities to foreign control, and . . . disputes
about international procedure, simply because a party asserts
that unspecified information exists overseas, poses a
significant threat to fair and timely resolution of cases before
the Commission.” Commission’s First Default Order 22, J.A.
335.
Finally, the Commission adequately explained why lesser
sanctions would not suffice: the discovery at issue here was so
broad and central to MCS’s case against Mediterranean that the

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absence of discovery “significantly limited MCS’s ability to
make its case.” Id. As a result, drawing adverse inferences
against or foreclosing defenses to Mediterranean would not
fully remedy the alleged harm to MCS and the disruption to the
Commission’s proceedings. Where Mediterranean had been
warned of default judgment as a possibility should it not
comply, the Commission reasoned, “[t]he failure of those
warnings to produce any effect . . . supports our conclusion that
only default is an adequate sanction here.” Id. at 23, J.A. 336.
This well-reasoned conclusion, especially in the context of
Mediterranean’s repeated disregard for binding Commission
orders, did not constitute abuse of discretion on the
Commission’s part.
III. CONCLUSION
For the foregoing reasons, Mediterranean’s petitions for
review are denied.
So ordered.

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