Spencer Livestock Commission Company Mike Donaldson v. Department of Agriculture

841 F.2d 1451, 1988 U.S. App. LEXIS 2880, 1988 WL 18442
CourtCourt of Appeals for the Ninth Circuit
DecidedMarch 8, 1988
Docket87-7189
StatusPublished
Cited by26 cases

This text of 841 F.2d 1451 (Spencer Livestock Commission Company Mike Donaldson v. Department of Agriculture) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Spencer Livestock Commission Company Mike Donaldson v. Department of Agriculture, 841 F.2d 1451, 1988 U.S. App. LEXIS 2880, 1988 WL 18442 (9th Cir. 1988).

Opinion

FLETCHER, Circuit Judge:

Petitioners Spencer Livestock and Michael Donaldson appeal a decision of the administrative law judge, upheld by the Judicial Officer of the Department of Agriculture, assessing $30,000 in civil penalties against them and suspending them as registrants under the Packers and Stockyards Act for 10 years. We affirm.

FACTS

Petitioner Michael Donaldson is the president, manager and controlling shareholder of Spencer Livestock Commission Company. He was registered as both a dealer and a market agent under the Packers and Stockyards Act of 1921, as amended, 7 U.S.C. § 181 et seq. (“the Act”).

This case concerns 17 transactions for livestock in March and April of 1982 involving sales by petitioners to three livestock feeders. Following complaints from feeders with whom Donaldson had done business, the Packers and Stockyards Administration, an agency of the U.S. Department of Agriculture (“USDA” or “Department”), began to investigate Donaldson’s operations in May, 1982. The agency wanted to determine whether Donaldson was in compliance with the Act and with consent orders to which Donaldson had previously agreed. Investigators were especially concerned with complaints about Donaldson’s failure to provide documentation for livestock purchases in Canada.

*1453 In August, an investigator requested from Donaldson all records and invoices for the previous eight months. Although Donaldson provided some materials, documents were missing that would have enabled the agency to trace the Canadian transactions. The investigator next went to the Alberta Department of Agriculture to obtain the missing documents. When he visited one of petitioners’ primary Canadian livestock suppliers, however, the supplier refused on Donaldson’s instructions to allow the investigator to review any documents. It was not until the next June that Canadian officials were able to forward copies of the relevant material to the agency.

On February 10, 1984, the Administrator of the agency filed a complaint against petitioners. The complaint alleged that Donaldson had committed unfair and deceptive acts in violation of 7 U.S.C. § 213(a). 1 Specifically, it charged Donaldson with buying livestock on a commission basis and then fraudulently billing his principals at weights and prices above, and shrinkages below, the actual figures at which he had purchased the livestock. It also alleged that Donaldson had failed to provide, upon the principals’ request, scale tickets, purchase invoices and other documents, all in an attempt to conceal the actual prices, weights and shrinkage allowances of the livestock. Finally, the complaint charged Donaldson with failing to maintain accounts, records and memoranda that fully and accurately disclosed the true nature of his operations, in violation of 7 U.S.C. § 221. 2

After a hearing on July 23-26, 1985, an administrative law judge (AU) found that, because Donaldson knew that his principals believed he was operating as a market agency, his submission of false accountings constituted fraud under section 213(a). The AU also found Donaldson’s destruction of invoices and other documents to be independent violations of section 213(a). In addition, Donaldson’s failure to keep full and correct accounts and records was in contravention of section 221, the AU concluded. In all, the AU found that Donaldson had fraudulently overcharged the feeders by more than $34,000 and had intentionally overweighed livestock by 8,000 pounds.

Noting that previous administrative and criminal sanctions had failed to deter Donaldson from committing the offenses, the AU decided that only severe sanctions would suffice. Accordingly, he issued a cease and desist order, imposed a civil penalty of $30,000 against Donaldson, and suspended him as a registrant under the Act for ten years. Donaldson petitioned the USD A Judicial Officer (“JO”) for review. On March 19, 1987, the JO adopted the AU’s findings as his final decision and added additional supporting conclusions. Donaldson timely petitioned this court for review.

DISCUSSION

This court has jurisdiction over decisions of the USDA pursuant to 28 U.S.C. § 2342(2).

A. Unfair and Deceptive Acts Under 7 U.S.C. § 213

Petitioners concede that substantial evidence supports the JO’s finding that they *1454 acted in the capacity of a market agency, rather than as a dealer, and were therefore under a fiduciary duty. They contest the imposition of penalties, however, on the ground that the Department failed to demonstrate that their conduct was unfair or deceptive within the meaning of 7 U.S.C. § 213. We must uphold the JO’s finding as to deception if it is supported by substantial evidence. Bosma v. U.S. Dept. of Agric., 754 F.2d 804, 807 (9th Cir.1984); Corona Livestock Auction, Inc. v. U.S. Dept. of Agric., 607 F.2d 811, 814 & n. 8 (9th Cir.1979).

Section 213 prohibits a market agency from engaging in “any unfair, unjustly discriminatory, or deceptive practice” in connection with the buying or selling of livestock. 7 U.S.C. § 213(a). It permits the Secretary of Agriculture to assess a civil penalty of up to $10,000 for each violation. 7 U.S.C. § 213(b). The statute does not define what is meant by the terms unfair and deceptive; it has been held that “their meaning must be determined by the facts of each case within the purposes” of the Act. Capitol Packing Co. v. United States, 350 F.2d 67, 76 (10th Cir.1965).

In Central Coast Meats v. U.S. Dept. of Agric., 541 F.2d 1325 (9th Cir.1976), we rejected the government’s argument that it was unfair under section 213 for one concern to own both a cattle-buying and a meat-packing business. Central Coast, 541 F.2d at 1327.

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Bluebook (online)
841 F.2d 1451, 1988 U.S. App. LEXIS 2880, 1988 WL 18442, Counsel Stack Legal Research, https://law.counselstack.com/opinion/spencer-livestock-commission-company-mike-donaldson-v-department-of-ca9-1988.