Jeffrey C. Ferguson v. United States Department of Agriculture

911 F.2d 1273, 1990 U.S. App. LEXIS 14133, 1990 WL 117283
CourtCourt of Appeals for the Eighth Circuit
DecidedAugust 15, 1990
Docket89-2079
StatusPublished
Cited by12 cases

This text of 911 F.2d 1273 (Jeffrey C. Ferguson v. United States Department of Agriculture) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Jeffrey C. Ferguson v. United States Department of Agriculture, 911 F.2d 1273, 1990 U.S. App. LEXIS 14133, 1990 WL 117283 (8th Cir. 1990).

Opinions

[1274]*1274BEAM, Circuit Judge.

In this Packers and Stockyards Act case, see 7 U.S.C. §§ 181-229 (1988), Jeffrey C. Ferguson appeals from the judgment of the judicial officer of the United States Department of Agriculture finding that Ferguson engaged in unfair and deceptive trade practices in violation of 7 U.S.C. § 213(a). Specifically, the judicial officer found that Ferguson, a cattle dealer, fraudulently overcharged some of his customers in transactions in which he acted as a market agency, as defined by the Act. The judicial officer entered a cease and desist order, and imposed both a $25,000 civil penalty to be held in abeyance for five years, and a six-month suspension of Ferguson’s registration with the Packers and Stockyards Administration. Finding it to be without justification in fact and an abuse of the Secretary’s discretion, we reverse the imposition of the suspension.

I. BACKGROUND

Ferguson, age thirty-five, operates Ferguson Cattle Company in Spirit Lake, Iowa. He is the sole owner of the cattle company, and has been registered as a dealer with the Packers and Stockyards Administration since 1979. Most of Ferguson’s customers live in Iowa, where Ferguson maintains his business and a residence, but he spends much of his time buying cattle in Montana and South Dakota. Ferguson at one time maintained a second residence in Montana, and still spends a great deal of time there, where his wife is a student at Montana State University. With the exception of one year, Ferguson’s cattle business has been profitable.

For reasons not in the record, the Packers and Stockyards Administration began an investigation of Ferguson in January 1986. Jimmy Arnaiz, a marketing specialist with the Packers and Stockyards Administration, went to Spirit Lake to meet with the Fergusons in early 1986. Ferguson had talked to the Administration about his annual reports, but not about his invoicing or his trade practices. Arnaiz spent two days reviewing Ferguson’s records for 1985 — purchase invoices, cancelled checks and ledgers. He eventually focused on seventeen transactions involving fourteen customers. Arnaiz said that these transactions were improper because “there was a markup in price plus a commission being charged.” Transcript of Hearing at 18. By comparing the invoice price with Ferguson’s cancelled checks, Arnaiz calculated, for all seventeen transactions, a difference of $13,896.71 between what Ferguson paid for the cattle and what he sold them for. In re Ferguson, P & S Docket No. 6826, slip op. at 5 (March 1, 1989).

As indicated, the purported problem with these transactions, according to the Administration, is that Ferguson allegedly charged both a markup in price and a commission for his services. The invoices did include a markup in price and a separate figure next to the word “commission.” Were Ferguson operating as a dealer, the total amount of the profit would not be a problem. Arnaiz testified that he told Ferguson that he could charge whatever the market would bear in a dealer transaction. Transcript of Hearing at 87. But if Ferguson were acting as an agent for his customer, then he could charge only a commission for his services, and not a markup in price. There is, however, apparently no limitation, except that imposed by competition, on the amount of commission an agency may charge.

The Packers and Stockyards Administration argues that because the invoices contained a separate charge for commission, Ferguson was acting as a market agency. As such, his customers would expect to pay only a commission for his services, and not a markup in price. Ferguson claims that he was in fact acting as a dealer in these transactions, and that the commissions were paid to others as a charge for referrals. Ferguson claims that he did not know that his invoicing was incorrect, and that he would otherwise simply have included the third-party commission, and other charges, in the total price for the cattle.

[1275]*1275At a hearing before an administrative law judge on October 21-22, 1987, the Department of Agriculture called seven of the customers who were allegedly defrauded by Ferguson. They testified that they had over time bought cattle from Ferguson on both a dealer and agency basis, and that, from the invoices in these transactions, they presumed that the invoice price was the price Ferguson had actually paid for the cattle. However, the customers were equivocal about whether Ferguson had been retained by them in advance to act as their agent. Ferguson also testified at length. He said that he understood his position in these sales to be that of a dealer; that the commissions were paid to others, as is common in the cattle business; and that he was unaware that his invoicing was incorrect or misleading.

The A.L.J. found that Ferguson had presented the transactions to his customers as agency transactions in which Ferguson would charge only a commission for his services, and that, because the invoices itemized a separate charge for commission, Ferguson was acting as a market-agency. The A.L.J. further found that Ferguson’s claims were not sufficiently supported by the record, and that Ferguson engaged, deliberately and calculatingly, in unfair trade practices. The A.L.J. entered an order requiring that Ferguson cease and desist from similar violations of the Act, assessing a $25,000 penalty to be held in abeyance for five years, and imposing a six-month suspension. Ferguson appealed to the judicial officer of the Department of Agriculture,1 who found, at great length, that the A.L.J.’s findings were supported by the record and that the penalties imposed were necessary to enforce the Act. This appeal followed.

II. DISCUSSION

A. Standard of Review

Because Ferguson does not challenge the judicial officer’s findings that he violated the Act, we do not consider whether there is substantial evidence to support this particular conclusion. Western States Cattle Co. v. United States Dep’t of Agric., 880 F.2d 88, 89 (8th Cir.1989). We review only the sanctions, governed by the standard set forth by the Supreme Court in Butz v. Glover Livestock Comm’n Co., 411 U.S. 182, 93 S.Ct. 1455, 36 L.Ed.2d 142 (1973). In Glover Livestock, the Supreme Court reversed a decision of this court that had upheld a cease and desist order based upon a weighing violation, but had reversed a twenty-day suspension, imposed pursuant to 7 U.S.C. § 204. See Glover Livestock Comm’n Co. v. Hardin, 454 F.2d 109 (8th Cir.1972), rev’d, Butz v. Glover Livestock Comm’n Co., 411 U.S. 182, 93 S.Ct. 1455, 36 L.Ed.2d 142 (1973). This court held that, given eases cited by the Department of Agriculture,2 such a suspension was appropriate only if the violation were intentional and flagrant.

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Bluebook (online)
911 F.2d 1273, 1990 U.S. App. LEXIS 14133, 1990 WL 117283, Counsel Stack Legal Research, https://law.counselstack.com/opinion/jeffrey-c-ferguson-v-united-states-department-of-agriculture-ca8-1990.