Perfectly Fresh Farms v. USDA

Violations of the Perishable Agricultural Commodities Act (“PACA”), 7 U.S.C. §499, can result in employment and licensing bans in the perishable produce industry if the person or subsidiary is found to be "responsibly connected."

Two entrepreneurs, Bennett and Duncan, founded a wholesale produce company, Perfectly Fresh Marketing Inc., in 2001 and subsequently created three subsidiary companies to oversee the business operations. The firms were soon in financial trouble and declared bankruptcy prior to these legal proceedings. Two of the firms violated the Perishable Agricultural Commodities Act (“PACA”), 7 U.S.C. §499, which was designed to ensure farmers are paid for produce. A Judicial Officer (“JO”) determined Bennett and Duncan were “responsibly connected”, within the meaning of the act, to the subsidiary companies which subjects them to “employment and licensing bans in the perishable agricultural commodities industry.” Bennett, Duncan and the subsidiaries petitioned for review of the order. PACA’s Chief Administrative Law Judge (“ALJ”) found the subsidiaries violated PACA’s “full-payment-promptly provision” and that Bennett and Duncan were “responsibly connected.” It was determined on appeal that Duncan was not connected enough and otherwise affirmed. The Ninth Circuit found that there was substantial evidence to support the finding that the subsidiaries failed to make prompt payment upon purchase of produce as required by § 499b(4). The Ninth Circuit also concluded from the evidence that Duncan and Bennett met the requirements of §499a(b)(9) to be “responsibly connected” in the subsidiaries and farms by being “actively involved in the activities resulting in the violation.” Petitions for review REJECTED.