Teo Siong Seng, Singamas sued by US firms in start of class action over US container price-fixing indictments

[SINGAPORE] An importer and a trucking provider have filed the first class-action lawsuits against leading container makers and their executives, including Singapore shipping magnate Teo Siong Seng, alleging that they fixed prices of shipping dry containers.

These lawsuits came hot on the heels of the US Department of Justice’s (DOJ) May announcement accusing four container makers and their executives, including the 71-year-old Teo, of colluding to artificially inflate the prices of standard shipping dry containers by limiting output.

The plaintiffs are seeking damages, restitution and disgorgement of profits from the defendants. While no exact figures were specified, they asked the court to treble the amount of damages.

CA Spalding and Daybreak Express filed legal actions with the US District Court for the Northern District of California a week apart, with the former lodging on Jun 2.

CA Spalding is an American industrial component manufacturer that imports component parts and goods from suppliers abroad, including China. Daybreak Express is an expedited shipping service and trucking company with ports in New York and New Jersey.

They filed the civil action on behalf of themselves, and intend to represent a nationwide or state-specific class of indirect purchasers of containers from the defendant companies.

CA Spalding said that the proposed class consists of at least 100 members.

Both named four container manufacturers and some of their executives as defendants, as well as their alleged co-conspirators, whose identities are not known.

Teo, the CEO of Hong Kong-listed Singamas Container, is among those being sued in both civil cases.

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China International Marine Containers (CIMC), Shanghai Universal Logistics Equipment, CXIC Group Containers and Singamas, as well as some of their high-ranking executives, have been accused by the US of controlling container output to artificially inflate prices of the steel boxes during the Covid-19 pandemic.

CA Spalding also sued the US subsidiaries of CIMC and American sister companies of Shanghai Universal Logistics Equipment, an indirect subsidiary of Cosco Shipping Development.

The plaintiffs alleged that they paid supracompetitive prices for standard dry shipping containers as a result of the defendants’ conduct, and that the latter have violated federal antitrust law, as well as various state antitrust, consumer protection and unjust enrichment laws.

While they were not direct buyers of containers from the defendant companies during the period in question, the plaintiffs argued that they were affected, as direct purchasers of containers were the first to pay artificially high prices.

Some or all of the overcharges were passed along the distribution chain and absorbed by downstream purchasers, including the plaintiff and class members.

Daybreak Express said in the complaint: “Defendants have benefited from their unlawful acts, and it would be inequitable for defendants to be permitted to retain any of the ill-gotten gains resulting from the overpayments made by plaintiff or the class members for standard dry shipping containers...

“(The) plaintiff and class members are entitled to the amount of defendants’ ill-gotten gains resulting from their unlawful, unjust and inequitable conduct. The plaintiff and class members are entitled to the establishment of a constructive trust consisting of all ill-gotten gains, from which (the) plaintiff and members of the class may make claims on a pro rata basis.”

Both plaintiffs reproduced the DOJ’s allegations of the defendants’ alleged modus operandi in their written complaints.

The defendants were accused of agreeing to restrict their output of shipping containers by various means, such as by limiting the number of shifts and hours that each production line for containers could run daily. They are also alleged to have used video surveillance to ensure that the co-conspirators complied with the output quotas.

There were allegedly financial penalties for any of the four conspirators caught producing more than their allotted share. Through this alleged conspiracy, these shipping container manufacturers are said to have posted a 100-fold jump in profits during the pandemic.

Both suits have their case management conference that is set to take place in September.