Finer Foods Sales Co., Inc. v. John R. Block, Secretary of Agriculture, United States Department of Agriculture, and United States of America

708 F.2d 774, 228 U.S. App. D.C. 205, 1983 U.S. App. LEXIS 27294
CourtCourt of Appeals for the D.C. Circuit
DecidedMay 27, 1983
Docket82-1843
StatusPublished
Cited by27 cases

This text of 708 F.2d 774 (Finer Foods Sales Co., Inc. v. John R. Block, Secretary of Agriculture, United States Department of Agriculture, and United States of America) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Finer Foods Sales Co., Inc. v. John R. Block, Secretary of Agriculture, United States Department of Agriculture, and United States of America, 708 F.2d 774, 228 U.S. App. D.C. 205, 1983 U.S. App. LEXIS 27294 (D.C. Cir. 1983).

Opinion

Opinion for the Court filed by Circuit Judge FRIEDMAN.

FRIEDMAN, Circuit Judge:

This is a petition for review of a decision of the Secretary of Agriculture that the petitioner, Finer Foods Sales Co., Inc., a licensee under the Perishable Agricultural Commodities Act, 7 U.S.C. §§ 499a-499s (1976 & Supp. V 1981) (“Act”), was guilty of “flagrant and repeated” violations of the Act. The effect of that determination is to prohibit any person “responsibly connected” with the petitioner from working for another licensee for at least a year. We affirm.

I.

The Perishable Agricultural Commodities Act requires persons who buy or sell significant quantities of perishable agricultural commodities at wholesale in interstate commerce to have a license issued by the Secretary of Agriculture. 7 U.S.C. § 499c (1976). The Act subjects licensees to various requirements and prohibitions. Section 2(4) of the Act, 7 U.S.C. § 499b(4) (1976), the provision here involved, makes it unlawful for any licensee “to fail or refuse truly and correctly to account and make full payment promptly in respect of any transaction in any such commodity to the person with whom such transaction is had.”

The petitioner was a licensee under the Act. It was first licensed in 1977, and its license was renewed annually until 1980. The Judicial Officer of the Department of Agriculture, to whom the Secretary has delegated his adjudicatory functions under the Act (7 C.F.R. § 2.35 (1982)), found that “[a]t the time of its licensing in 1977 [the petitioner] was fully advised of the ... responsibilities of licensees under the Act to make full and prompt payment for its perishable agricultural commodities purchases.”

In January 1978, the petitioner obtained a revolving loan from the BVA Credit Corporation (“BVA”), a division of the Bank of Virginia. The loan was computed on a daily basis, and was secured, apparently, by a pledge of the petitioner’s accounts receivable and inventory.

In February 1979, Paris Foods sold and delivered to the petitioner two shipments of green beans at an invoice price of $27,257. When Paris Foods had not been paid by May, it submitted an informal complaint to the Department of Agriculture, which notified the petitioner of the complaint. The latter admitted its indebtedness and agreed to pay the amount due in two installments. The petitioner sent its check for the first installment of $14,000 in June, as agreed.

Before the check was presented for payment, however, BVA had taken possession of the petitioner’s assets and “frozen” its bank account. It took this action the day after the petitioner’s president had told BVA that his company was considering making an assignment for the benefit of creditors. Several days later the petitioner made the assignment.

As a result of BVA’s “freezing” of the petitioner’s bank account, the petitioner’s $14,000 check to Paris Foods was not paid. Paris Foods notified the Department of the default, and the Department began an in *777 vestigation of the reasons for nonpayment. Upon ascertaining that the petitioner had made an assignment for the benefit of creditors and was insolvent, the investigator reviewed the petitioner’s books and records and discovered that the petitioner had made 23 other purchases of perishable agricultur- • al commodities for which it had not paid. These debts, which involved transactions over a period of almost five months, covered 18 transactions with one seller totaling approximately $21,000 and five transactions with another seller totaling approximately $27,000.'

After it learned of the petitioner’s insolvency, the Department began a formal reparations proceeding on behalf of Paris Foods against the petitioner. In its answer to the reparations complaint, the petitioner admitted that it owed the money as alleged. On February 12, 1980, the Judicial Officer entered an order concluding that the petitioner had violated section 2 of the Act and directing the petitioner to pay Paris Foods $27,257 within 30 days.

Four days earlier the insolvency trustees of the petitioner, following their sale of the petitioner’s assets, had made a seven percent pro rata payment to all the creditors, including Paris Foods. The latter never received any additional payments under the reparations order.

On January 24,1980, the Secretary issued a formal disciplinary complaint against the petitioner based upon the 24 transactions in which the petitioner had failed to pay its debts. After a hearing, the Administrative Law Judge issued a recommended decision that the petitioner had violated the Act and that its license should be revoked.

The petitioner appealed the decision to the Judicial Officer, who in June 1982 upheld the finding of violation. He held that the petitioner’s failure to make payment in the 24 transactions constituted “flagrant and repeated violations of the Act and the Regulations.” The Judicial Officer further ruled that because the petitioner’s officials had acted with “full knowledge of what they were doing,” the violations were “willful” under the Administrative Procedure Act.

The Judicial Officer modified the recommended order by eliminating the provision revoking the petitioner’s license. He did so because the license had expired, the petitioner was insolvent, and it was no longer actively involved in a business the Act covered. In these circumstances, he concluded, revocation would be a meaningless act. He ordered, however, publication of the finding that the petitioner flagrantly and repeatedly had violated the Act. Publication of the Judicial Officer’s decision would have the same effect as a license revocation upon the ability of certain officials of the petitioner to be employed by other licensees. See infra pp. 782-783.

II.

The petitioner does not challenge the Judicial Officer’s determination that its failures over a five-month period to pay $75,-000 due on 24 transactions were “flagrant and repeated violations” of the Act. It argues only that in reaching that decision the Judicial Officer violated procedural requirements of the Administrative Procedure Act and the Perishable Agricultural Commodities Act, that he improperly failed to consider mitigating circumstances, and that he should have excepted the current employment of the petitioner’s president from the statutory bar upon employment by other licensees of persons “responsibly connected” with the petitioner.

III.

A. Section 9(c) of the Administrative Procedure Act, 5 U.S.C. § 558

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708 F.2d 774, 228 U.S. App. D.C. 205, 1983 U.S. App. LEXIS 27294, Counsel Stack Legal Research, https://law.counselstack.com/opinion/finer-foods-sales-co-inc-v-john-r-block-secretary-of-agriculture-cadc-1983.