Recent Development by Gustav F. Bahn
The Ormet Corporation (Ormet) announced in April 1995 that the Bisso Towing Company (Bisso) would be the exclusive provider of harbor tug services for the Burnside Terminal beginning May 1, 1995. The terminal, located on the lower Mississippi River, is owned by the Greater Baton Rouge Port Commission (Commission) and was financed by the issuance of general obligation bonds. Upon completion, the terminal was leased to the Olin Matheson Chemical Corporation, who in turn assigned the lease to Ormet.
Prior to the April announcement, each ship was individually responsible for negotiating harbor services with a number of competing tug service providers. Ormet claimed that its change in policy was an attempt to eliminate cost delays and wharf damage resulting from inefficient harbor service providers. Ormet, however, did not possess sufficient tug service capabilities and subsequently entered into a “non-exclusive” contract with Bisso Towing Company to provide these services.
Upon learning of the announcement, competing tug service providers Crescent Towing & Salvage Company, Inc. and E.N. Bisso & Son, Inc. initiated suit seeking injunctive relief. The trial court held in favor of defendants Ormet and the Commission and denied the request for an injunction. The Louisiana Court of Appeal for the First Circuit affirmed. The Louisiana Supreme Court granted certiorari on the issue of whether the contract between Ormet and Bisso violated the Interstate Commerce Clause of the United States Constitution. In affirming the decision of the court of appeal, the Louisiana Supreme Court held that, as a lessor of marine terminals, the Commission was a market participant and therefore immune from a Commerce Clause challenge. The supreme court further held that the plaintiffs failed to establish a “close nexus” between the Commission and Ormet in the execution of the contract, and therefore Bisso's actions could not be imputed to the Commission. Crescent Towing & Salvage Co. v. Ormet Corp., 720 So. 2d 628, 634 (La. 1998), cert. denied, 119 S. Ct. 1035 (1999) (mem.).
About the Author
Gustav F. Bahn.
Citation
74 Tul. L. Rev. 1129 (2000)