• OWL's "Memorandum in Support of Final Award for Breach of Agency Agreement" dated February 22, 2013:
➢ Declaration of Robert E. Noonan dated February 21, 2013;
➢ Declaration of Cynthia M. Lochard dated February 20, 2013;
➢ Declaration of Daniel A. Ludwig dated February 20, 2013.
• On June 1, 2013, this arbitration panel was completed.
• On June 28, 2013, TOS submitted its initial response, including the following:
➢ Affidavit of Claudia Knaack dated June 21, 2013;
➢ Affidavit of Konstantin Kaiser dated June 24, 2013;
➢ Affidavit of Patrick Friess dated June 24, 2013;
➢ First Declaration of Peter Czajkowski dated June 28, 2013;
➢ Affidavit of Cord Bruegge dated June 25, 2013.
➢ Declaration of Manfred Schlöge dated June 28, 2013.
• OWL's "Reply to Respondent's Initial Submission" dated July 31, 2013.
• TOS's "Respondent's Response to Claimant's Reply Submission" dated October 11, 2013
➢ Second Declaration of Peter Czajkowski dated October 11, 2013;
➢ Declaration of Alan E. Baer dated October 11, 2013.
• October 15, 2013 - First hearing (organizational session).
• January 22, 2014 - Partial Final Award.
• May 8, 2014 - OWL's request for security.
• May 28, 2014 - Second hearing (testimony of Robert E. Noonan).
• May 29, 2014 - Third hearing (testimony of Daniel Ludwig and Cynthia Lochard).
• October 16, 2014 - Fourth hearing (testimony of Alan Baer).
• December 3, 2014 - Fifth hearing (testimony of Peter Czajkowski).
• On March 13, 2015 - OWL submitted its Post-Arbitration Brief and TOS its Initial Final Submission.
• Both parties submitted reply briefs on March 31, 2015.
• On October 6, 2015, the panel advised counsel that the record was closed and that the arbitrators would continue with their deliberation.
• Robert E. Noonan, President and CEO of OWL, a division of Pacer International (March 2012 - May 2014)
• Cynthia M. Lochard, Director of Corporate and International Accounting of OWL (April 2010 - March 2014).
• Daniel A. Ludwig, Vice President of Finance of Pacer (December 2011 -March 2014).
Clause 5: Settlement. Settlement of all transactions should be done monthly for all transactions completed during the month. Transfer of funds to be done via wire transfer to the bank details specified in Appendix 1. Accounts to be maintained with no balances past due 60 days. Settlement information to be provided using a MS Excel worksheet. Upon verification and confirmation of the statement accounts b both Parties, remittances shall be wire transferred to the bank detailed in Appendix 1. Such remittances will be wire transferred before the 15th day of the followoing month if the settlement amount exceeds US$1,000. If the settlement amount is under US$1,000, the settlement will be carried forward to the following month. The payment of air shipment should be settled no later than 15 days after the cargo departure. The Parties will resolve discrepancies with each other amicably and in good faith. Both Parties will be responsible for bank charges occurred locally.
Clause 10: Term and Termination. This Agreement and Agent's appointment hereunder shall become effective as of the earlier of the date [sic] set forth in the first paragraph of this Agreement or the execution of this Agreement by the Parties (such date, the "Effective Date"). This Agreement shall remain in effect for a period of one (1) year from the Effective Date and shall be automatically renewed for one (1) year if not previously terminated. Notwithstanding the foregoing, either Party shall have the right to terminate this Agreement for any reason upon providing the other Party with sixty (60) days' prior written notice; provided, however, that if agent terminates this Agreement pursuant to this Paragraph 9 while OWL has cargo in transit to or from Agent, Agent's termination of this Agreement shall not be effective until such cargo has reached its final destination. OWL may immediately terminate the Agreement upon written notice to Agent if any of the following events occur: (a) any material breach of the Agreement by Agent its affiliates or sub agents; (b) the filing of a bankruptcy petition against Agent; or (c) a change in Agent's ownership structure. Both Parties agree that any of the above mentioned kind termination frees both Parties from any further liability or monetary considerations from that point forward; provided, however, that any moneys or obligations due and owing from one Party to the other at the time of termination shall be settled within sixty (60) days of the date of the Agreement's termination. OWL reserves the right to discontinue the service on any trade lane for which Agent acts by providing Agent sixty (60) days' notice. In such a case, Agent agrees not to request any financial pay-off of OWL for having lost the agency for such lane. The provisions of Sections, 3, 6, 1, 9, 10, 12 and 16 (and any other provisions which by its nature should survive) will survive termination of this Agreement and remain in effect.
Clause 12: Nonsolicitation of Employees. During the term of this Agreement and for a period of six months after termination, neither Party will solicit the other Party's employees who have become known to it as a result of the other Party's performance under this Agreement. These restrictions will not prevent a Party from soliciting or hiring a person by means of a help-wanted advertisement, web posting or similar public solicitation.
Clause 14: Modification, Waiver and Cumulative Remedies. This Agreement may not be amended, released, discharged, rescinded or abandoned, except by a written agreement duly executed by each of the Parties. The failure of any Party at any time to enforce any of the provisions of this Agreement will in no way constitute or be construed as a waiver of such provision or of any other provision hereof, nor in any way affect the validity of, or the right thereafter to enforce, each and every provision of this Agreement. All rights and remedies provided for in this Agreement are cumulative and may, to the extent permitted by law, be exercised at the same time or separately. The exercise of any one right or remedy shall not be deemed to be an election of such right or remedy or to preclude the exercise of any other right or remedy.
Clause 16: Choice of Law and Jurisdiction. This Agreement shall be governed by and interpreted in accordance with the laws of the state of New York, disregarding any conflict of law rules that may direct the application of the laws of another jurisdiction. All claims or actions under this Agreement shall be resolved by arbitration in New York, NY, or such other place as the Parties may mutually agree pursuant to the rules and procedures of the Society of Maritime Arbitrators. There shall be no restrictions on the nationality of the arbitrator. Except by agreement of the Parties otherwise, there shall be no pre-hearing discovery. The decision of the arbitrator shall be final, binding, and not subject to further review. In all other respects, the procedural rules of the Society of Maritime Arbitrators shall govern the conduct of the arbitration; provided, however, that if the procedural rules of the Society of Maritime Arbitrators do not contain a provision applicable to a given procedural issue, then the laws of the State of New York shall govern. Any court, tribunal or other forum as may properly assert jurisdiction may enforce the decision of the arbitrator.
ATTACHMENT 'A' - COMPENSATION BASIS
A) Westbound/Export to other countries
• USA destinations:
Lumpsum profit share to be negotiated once/twice a year, depending on the market development.
• Non USA destinations:
1. If the cargo was booked by you the following formula will apply:
Gross profit, i.e. difference between the buying rates and the selling rates (all income and costs factors including profit of pre and oncarriages, windfall profits etc are to be calculated) minus USD 16 per container for the P&I insurance, minus USD X (as per OWL agency list section compensation of agents) per B/L (file) for the agent in the destination port as a lumpsum dispatch fee, you may negotiate different amounts.
The profit share for OWL Hamburg is included in the lumpsum payments.
B) IMPORT to your country
• Dispatch of cargo
1. USD 40 per file.
• Routing of cargo
Gross profit, i.e. difference between the buying rates and the selling rates (all income and costs factors including profits of pre and oncarriages, windfall profits etc are to be calculated) minus USD 16 per container for the P&I insurance.
Thereafter, 50/50 percent profit share with OWL New York.
Buying rate is USD 1000,- all in Selling rate is USD 1266,- all in
The movement is one container from New York to your port
USD 266 is the gross margin Minus USD 16 insurance
USD 250 net profit
USD 125 for you and USD 125 for OWL New York: No sharing with Hamburg in such cases.
C) Cross trade fee split
The fee split for a 3 agents business should be 50/25/25. 50 Percent to the agent who came up with the biz, 25 Percent to the agent in the load port and 25 percent to the agent in the discharge port. On non USA business the agency fee for the dispatching agent is according to the agency list with charges that is circulated from time to time.
• It has met its burden of proof to establish TOS's multiple breaches of the Agency Agreement.
• It has established the amounts owed by TOS for overdue accounts under the Agency Agreement.
➢ TOS claims are for amounts due to TOS Group entities outside the scope of arbitration under the Agency Agreement.
➢ Under New York law, the terms of the Agency Agreement cannot be modified by the parties' course of dealing.
• It has established direct financial loss due to TOS's solicitation (and hiring) of OWL's employees and breach of contract, fiduciary and loyalties duties under the Agency Agreement.
• TOS's claims for amounts owed by OWL Hamburg to TOS Vancouver or TOS Canada are outside the scope of the arbitration provision of the Agency Agreement.
• TOS's counterclaims are without merit, wholly unsupported and should be denied.
• OWL has failed to carry its burden of proof.
• OWL's claim for amounts allegedly due and owing from TOS to OWL must be denied.
➢ TOS did not breach the Agency Agreement.
➢ As part of the parties' ongoing reconciliation process, TOS validly disputed any balance due in favor of OWL.
➢ OWL had no right to terminate the Agency Agreement for cause.
➢ OWL's "account stated" claim is meritless.
➢ TOS validly negotiated the elimination of the lumpsum profit sharing payment and thus OWL is not entitled to €98,419.23 allegedly due to OWL Hamburg.
• OWL's non-solicitation claim is factually and legally meritless and, in any event, must be denied because OWL failed to carry its burden of proof.
• OWL's claim against TOS Canada is not properly before this panel because it does not arise under the Agency Agreement.
• TOS is entitled to damages on its counterclaim.
Having said that, the financial performance in the first quarter and the international logistics, that is our international freight forwarding and Pacer Distribution Services businesses, was disappointing with operating income behind our internal plans by about $1.5 million as John mentioned. The logistics revenue decline of $18 million or 23%, which was also down a similar amount from our internal plans was mostly due to international freight forwarding business, with the largest decline from U.S. exports due to the soft global economic conditions, competitive pricing pressure, and turnover in key management positions. [First Quarter Report]
Bob Noonan - EVP, International Logistics: Thanks Mike. The Logistics segment had another difficult quarter with revenue down $21 million at [sic] 25%. Segment lost $2.5 million in operating income in the quarter, the loss coming as a result of lower volumes and revenue levels. The revenue decline came in at our international freight forwarding business with the largest decline coming once against from U.S. exports due to competitive pricing pressure and turnover in key positions. [Second Quarter Report]
Bob Noonan - EVP, International Logistics: Thank you, Mike. The Logistics segment had another difficult quarter. Revenue of $58 million was down $16 million or 21 % year-over-year. This was also down $4 million from last quarter and from our expectations for the third quarter. The year-over-year revenue decline came from the international freight forwarding business. As a result of the revenue declines, this segment lost $2.3 million in operating income, which was slightly better than last quarter's results.
As Dan mentioned, the shortfall of revenues and margins compared to our expectations was mainly because of a significant organizational change in our European operations, where we took the opportunity to change our leadership and replace them with experienced people whose motivations are aligned with.... [Third Quarter Report]
Bob Noonan - EVP, International Logistics: Thank you, Paul and good morning everyone. As Dan mentioned, Logistics segment made its targeted [sic] of sequential improvement of $500,000 after taking into consideration the unexpected cost outlined by Dan. Our overall revenue was down by $11 million or 16% from the same quarter last year. It was down by less than $1 million from the third quarter. This small sequential decline signals a significant reduction in churn and demonstrates the minimum comp retention in building new business through our new.... [Fourth Quarter Report]
[t]his Agreement may not be amended... except by a written agreement duly executed by each of the Parties. The failure of any Party at any time to enforce any of the provisions of this Agreement will in no way constitute or be construed as a waiver.
Due to organizational changes in OWL Hamburg as well as at OWL's Headquarter in New York, which started in 2011, I was concerned about the future development of OWL Hamburg and felt extremely uncomfortable with my engagement in this group.
Most of my colleagues at OWL Hamburg felt alike and various internal discussions were held among us, also thinking about alternative engagements in other companies.
When we discussed this with colleagues of TOS who since long shared the same office rooms with us in Hamburg, we have heard that TOS group planned to start business in Hamburg with a new company, being established soon; this replacing TransOcean Shipping Transportagentur GmbH, which was sold in 2011 before.
Me and my colleagues then talked to other TOS friends and discussed a potential engagement with this prospective company, which later was established as OLE Oceanwide Logistics Europe GmbH ("OLE").
Solely based on my personal future prospects, it then was my sole decision, to quit my employment with OWL Hamburg and to start working for OLE.
Others of my colleagues also left OWL Hamburg but started employment with other companies in Hamburg.
As I said, we made an investment of a global vice-president of sales who was responsible for sales across the organization. We added a number of people throughout the organization that understood how to sell supply chain, understood how to sell logistics, how to bundle services. That was all an investment that we made.37
Q. Did you ever speak to her about the reason she was departing the company?
Q. What did she tell you?
A. She wasn't really willing to provide a lot of information, other than it was very difficult for the times that they had gone through since 2011.
Q. Did you understand what she meant by this?
Q. What did you understand?
A. That basically she was put into a position that she really didn't want.
Q. Meaning -
A. A position meaning a title. She was put in as a general manager, and she did not want to be a general manager.
Q. Did she say why that was?
A. She didn't want the responsibility.
Q. Did you understand that was one of the reasons why she left the company?
A. Well, I gave her the opportunity to change that.
Q. But you knew that she was interested in leaving?
A. She never said she was interested in leaving.
Q. You understood she was unhappy?
• Total amount owed OWL $ 85,019.14
• Interest thereon 8,932.96
• Reimbursement of legal costs and arbitrator fees 79,091.00
relating to the ruling in the Partial Final Award 14,650.00
• Interest thereon 4,611.29
Total due OWL $192,304.39