Lion Raisins, Inc. v. United States

51 Fed. Cl. 238, 2001 U.S. Claims LEXIS 258, 2001 WL 1602145
CourtUnited States Court of Federal Claims
DecidedDecember 14, 2001
DocketNo. 01-322C, 01-536C
StatusPublished
Cited by22 cases

This text of 51 Fed. Cl. 238 (Lion Raisins, Inc. v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lion Raisins, Inc. v. United States, 51 Fed. Cl. 238, 2001 U.S. Claims LEXIS 258, 2001 WL 1602145 (uscfc 2001).

Opinion

OPINION

MILLER, Judge.

These consolidated cases are before the court after argument on cross-motions for summary judgment. Plaintiff raisin manufacturer was suspended from bidding on government contracts for a period of one year after a government investigation determined that plaintiff had falsified three United States Department of Agriculture (the “USDA”) certificates. At issue is whether the USDA acted arbitrarily and capriciously in taking this action.

FACTS

Except as noted, the following facts are undisputed.1 Lion Raisins, Inc. (“plaintiff’), is a family-owned and operated business that grows and markets raisins. In addition to selling raisins to private enterprises, plaintiff successfully has bid on more than 20 contracts awarded by the USDA over the past decade. Plaintiff was awarded and successfully completed five of these contracts from May 26,1999, to the present.2

On November 22, 2000, the USDA issued an invitation for raisin handlers to bid on two government contracts for school lunch programs, Invitation 923 and Invitation 924, with a combined tonnage of approximately 7,000 tons. Bids were to be received by December 11, 2000, and plaintiff timely bid on both invitations. The USDA was to announce acceptances by the close of business on January 17, 2001.

Unknown to plaintiff, after the USDA received plaintiffs bids, it contacted the U.S. Small Business Administration (the “SBA”) to request a Certificate of Competency (“COC”) for plaintiff. In a December 14, 2000 letter, Susan E. Proden, Contracting Officer for the USDA, informed the SBA that the USDA believed plaintiff would be the successful bidder for the contracts.3 However, the USDA requested a COC for plaintiff because the USDA’s compliance office, the Agricultural Marketing Service (the “AMS”), just completed a preliminary investigation of plaintiff which revealed that certain raisin certifications had been falsified. The specific irregularities were that USDA inspector signatures had been forged and false moisture content readings were recorded. On at least one certificate, the grade of raisins had been changed from Grade C to Grade B. Further, the investigation determined that, over a three-year period, plaintiff fraudulently had received more than it was entitled to receive under government programs administered by the Raisin Administrative Committee. Ms. Proden also informed the SBA that the USDA had received numerous calls from the raisin industry accusing plaintiff of being a “large business,” contrary to plaintiffs assertion it was a “small business,” and thus the USDA had also initiated a size protest regarding plaintiff.

According to the complaint, plaintiff became aware of the AMS investigation as a result of the SBA’s competency and size inquiries.[241]*2414 Plaintiff alleges that the USDA refused to provide either plaintiff or the SBA with additional facts about its investigation. On January 2, 2001, the SBA informed plaintiff that the due date for the COC had been suspended pending the USDA’s release of its preliminary investigation report.

On January 12, 2001, Dr. Kenneth C. Clayton, AMS Associate Administrator for the USDA, issued a decision that suspended plaintiff from participating in government contracts for a period of one year. Dr. Clayton identified as grounds for the suspension the falsification of inspectors’ signatures and false moisture content readings on two USDA certificates and the change of grade of raisins on one certifícate. He concluded that these falsifications constituted “commission of any other offense indicating a lack of business integrity or business honesty that seriously and directly affect[ed] the present responsibility” of plaintiff, a ground for suspension set out in 48 C.F.R. (FAR) § 9.407-2(a)(7) (2000).5 The January 12 letter did not provide plaintiff with any other details of the investigation. The USDA published a press release the same day announcing the suspension and reporting that the USDA also had filed an administrative complaint to deny inspection services to plaintiff. The press release disclosed the fact that the inspection certificates at issue were related to raisins exported in 1998.

On January 16, 2001, plaintiff informed the USDA that it requested a hearing on the suspension decision. At that time it also asked for a copy of the USDA’s investigation report and demanded documents to assist it in preparing to argue against the suspension. Plaintiff then filed suit in the United States District Court for the Eastern District of California (Fresno) in an attempt to prevent the USDA from awarding the two raisin contracts. On January 17, 2001, the USDA awarded the raisin contracts to bidders not now identified by the parties. The USDA subsequently withdrew the award of the contracts referred to in Invitation 924 because of a defect in the bidding process.

On January 19, 2001, in response to an order by the Fresno district court, the USDA provided plaintiff with a redacted copy of its Report of Investigation dated May 26, 1999 (the “USDA Report”). The USDA explained that it produced “only the portions of the report that relate to the allegations that led to the suspension. Most of the redactions concerns [sic] a different allegation that was not the basis for the suspension.” The USDA Report states that on February 20, 1998, an officer of the USDA’s Fresno inspection office received an anonymous tip that Bruce Lion, plaintiffs Vice President, falsified plaintiffs inspection certificates. According to the tipster, plaintiff kept a supply of unsigned certificates that were forged when raisins failed to meet a buyer’s specifications. The USDA was told to look for certificates issued to certain overseas buyers for evidence of falsification. An internal USDA investigation revealed that, from January 1996 through July 1998, 13 inspection certificates assigned to plaintiff were unaccounted for by USDA records. The AMS also requested copies of USDA certificates, bills of lading, and receipts of shipments from 109 of plaintiffs foreign customers. Eight responded with copies of USDA inspection certificates. The AMS interviewed the USDA inspectors referenced on those certificates and determined that two of the certificates had been forged. Those same two certificates reported moisture levels lower than those recorded in the inspectors’ handwritten line check sheets. Moreover, neither appeared on the USDA’s register of issued certificates. A third certificate bore a verified USDA signature, but indicated the raisins shipped were of Grade B when the copy in the USDA’s possession indicated that the raisins were Grade C.

Plaintiffs hearing was held on February 1, 2001, at the USDA’s headquarters in Washington, DC. Dr. Clayton and others from the AMS were present. Plaintiff was informed [242]*242that the purpose of the hearing was to afford plaintiff the opportunity to present to the USDA “what Lion Raisins has done, what it’s currently doing and what Lion Raisins plans to continue doing to assure the Department that it is a responsible business.” Transcript of Proceedings, Lion Raisins, Inc. v. USDA, at 16 (Dept.Agric.Feb. 1, 2000). Plaintiff was also told that the USDA would be presenting no witnesses or other evidence and that plaintiff would not be allowed to question Dr. Clayton.

When asked to speculate on the source of the forged certificates, Mr.

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Bluebook (online)
51 Fed. Cl. 238, 2001 U.S. Claims LEXIS 258, 2001 WL 1602145, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lion-raisins-inc-v-united-states-uscfc-2001.