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Williamsport Purveyors Inc. v. U.S. Dept. of Agriculture

filed: August 28, 1990.

WILLIAMSPORT PURVEYORS INC., PETITIONER
v.
UNITED STATES DEPARTMENT OF AGRICULTURE, RESPONDENT



On Petition for Review of an Order of the Secretary, United States Department of Agriculture.

Stapleton, Cowen and Weis Circuit Judges.

Author: Cowen

Opinion OF THE COURT

Petitioner Williamsport Purveyors, Inc. ("Purveyors") appeals from an Order of the Secretary of the United States Department of Agriculture (the "Secretary") denying Purveyors a license under the Perishable Agricultural Commodities Act, 7 U.S.C.A. § 499a (1980), et seq., as amended ("PACA"). The Secretary denied Purveyors' application for a license on the grounds that Harvey Boatman, who was acting as the sole officer, director, and shareholder of Purveyors in his capacity as the executor of the estate of Purveyors' recently deceased sole officer, director, and shareholder, was unfit. On February 14, 1990, Purveyors petitioned this Court to review the decision of the Secretary. We have jurisdiction pursuant to 28 U.S.C. § 2342(2). Because we find that the Secretary did not abuse his discretion in denying Purveyors' application, we will deny the Petition for Review.

I.

Harvey Boatman has a history of PACA violations. Boatman was president, treasurer, director, and 100% shareholder of Rinella's, Inc. ("Rinella's"). Rinella's held a PACA license from 1977 to 1985. In 1985, an administrative law Judge revoked Rinella's PACA license, effective May 17, 1985, because he found that Rinella's had repeatedly violated PACA's provisions. Boatman was subsequently informed that because he was "responsibly connected" to Rinella's, he would be ineligible for employment by a PACA licensee for one year dating from the time Rinella's PACA license was revoked. For the year following his complete suspension, Boatman would only be permitted to work for a PACA licensee if he posted satisfactory bond and the Secretary approved. The restrictions on Boatman's employment by a PACA licensee were scheduled to expire on May 17, 1987.

Just three days after its license was revoked, Rinella's began operating again in violation of 7 U.S.C. § 499c(a). Rinella's (and Boatman) continued operating illegally through January, 1986. On February 9, 1987, the United States District Court for the Middle District of Pennsylvania approved a consent decree imposing a $5000 civil penalty against Rinella's and enjoined Rinella's and Boatman from engaging in any PACA business without a valid PACA license. The order stated that until May 17, 1987, Boatman could only work for a PACA licensee if he posted a four year surety bond satisfactory to the Secretary.

The day after the District Court issued its order, February 10, 1987, a PACA license was issued to Williamsport Produce and Seafood, Inc. ("Williamsport Produce").*fn1 The license application for Williamsport Produce stated that Effie Boatman, Harvey Boatman's mother, was its sole principal. In direct violation of the District Court's recent order, Williamsport Produce employed Boatman from March 13, 1987 through May, 17, 1987 without posting the required bond and without obtaining the Secretary's consent. During this period, Boatman had exclusive control over the business of Williamsport Produce. On February 18, 1988, an administrative law judge rendered a decision and order finding that Boatman's employment at Williamsport Produce violated PACA. The order suspended the license of Williamsport Produce from April 8, 1988 through June 9, 1988. Effie Boatman died on April 8, 1988. From that date until May 23, 1988, Boatman operated Williamsport Produce in violation of the administrative law judge's order.

On July 13, 1988, a little more than one month after the last order restricting Boatman's PACA employment expired by its own terms, Purveyors submitted the PACA license application which gives rise to this appeal. The application lists Harvey Boatman as the executor of Effie Boatman's estate and states that Boatman is acting as director and officer of Purveyors on behalf of the estate. On August 11, 1988, the Director, Fruit and Vegetable Division, Agricultural Marketing Service, United States Department of Agriculture, filed a notice to show cause why Purveyors should not be denied a PACA license. Purveyors requested a hearing on the matter, which was held before an Administrative Law Judge. On April 28, 1989, the ALJ issued an order denying Purveyors application. On June 5, 1989, Purveyors appealed to the Judicial Officer who has the authority pursuant to 7 C.F.R. § 2.35 to issue final decisions and orders on behalf of the Secretary. On December 21, 1989, the Judicial Officer adopted the ALJ's decision in all material respects. This appeal followed.

II.

On appeal, Purveyors argues that Boatman never violated the consent order issued by the District Court for the Middle District of Pennsylvania with respect to Purveyors because that order expired by its own terms on May 17, 1987 and Purveyors was not formed until October 30, 1987 so no bond was required to be posted for the work Boatman performed at Purveyors. Likewise, Purveyors argues that Boatman did not violate the administrative order entered February 18, 1988, because he was not employed at Williamsport Produce in his personal capacity, but as executor of Effie Boatman's estate. This, Purveyors contends, is as far as the inquiry of the Department of Agriculture should have gone. We disagree.

III.

PACA requires all commission merchants, dealers, and brokers to be licensed by the Department of Agriculture. 7 U.S.C. § 499c(a). The Secretary of Agriculture may refuse to issue a PACA incense, if after a hearing, he determines that:

the applicant is unfit in the business of a commission merchant, dealer, or broker because the applicant . . . or in case the applicant is a corporation, any officer or holder of more than ten per centum of the stock, prior to the date of the filing of the application ...


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