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04/19/88 Carpenito Bros., Inc. A/T v. United States Department

April 19, 1988

CARPENITO BROS., INC. A/T/A 5 C'S FRUIT & PRODUCE PETITIONER

v.

UNITED STATES DEPARTMENT OF AGRICULTURE 1988.CDC.157 DATE FILED: APRIL 19, 1988



Before: WILLIAMS and D.H. GINSBURG, Circuit Judges, and BOGGS*, Circuit Judge of the United States Court of Appeals for the Sixth Circuit

UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT

Rules of the District of Columbia Circuit Court of Appeals may limit citation of unpublished opinions. Please refer to the Rules of the United States Court of Appeals for this Circuit.

PETITION FOR REVIEW FROM THE UNITED STATES DEPARTMENT OF AGRICULTURE

MEMORANDUM

Petitioner seeks reversal of an order by the United States Department of Agriculture revoking his license under the Perishable Agricultural Commodities Act of 1930, 7 U.S.C. § 499a et. seq. (1982) . Although petitioner raises a number of claims, the only one that requires discussion is petitioner's argument that he was denied due process by the USDA Judicial Officer's decision to consider on appeal certain evidence that had been excluded by the Administrative Law Judge. Because we find that petitioner had ample opportunity to rebut the evidence at issue, we reject its due process claim.

Carpenito Bros., Inc. is a wholesale dealer in the interstate fruit and vegetable market, a business requiring a license under PACA. Carpenito, which has operated 5 C's Fruit & Produce for approximately thirty years in the Boston, Massachusetts area, has held a PACA license since 1966. On June 11, 1985, USDA filed a disciplinary complaint seeking to revoke Carpenito's license for failure to make full payment promptly to 22 suppliers in connection with 522 fruit and vegetable transactions. Carpenito denied that it had violated the Act and requested a hearing on the matter. An oral hearing was held before the ALJ on October 17, 1985.

The ALJ found that "the acts of [Carpenito] in failing to make full payment promptly in accordance with its credit arrangements with its suppliers . . . constitute willful, flagrant and repeated violations of section 2 of the PACA (7 U.S.C. 499(b)." Petitioner's Appendix at 38. Though the agency sought revocation, the ALJ issued an order suspending Carpenito's license, but holding the suspension in abeyance for one year so long as there were no future failures to pay promptly.

In connection with its request for revocation, USDA sought to introduce before the ALJ about 200 invoices and a four-page table concerning numerous fruit and vegetable transactions entered into by Carpenito after the filing of the complaint. The agency had obtained the documents directly from Edward Carpenito, Carpenito's buyer, two days before the hearing. The evidence showed that with respect to 143 transactions that occurred during the period from April through October 1985, Carpenito had not paid the vendors in full as of October 15, 1985.

Carpenito objected to the admission of the documents on the ground that the alleged violations had not been specified in the complaint. Id. at 99-104. In refusing to admit the evidence, the ALJ stressed that Carpenito had no notice it would be required to defend against such transactions. Id. at 42-43. She also expressed doubts about the probative value of the evidence. Id. at 43.

USDA appealed the ALJ's sanction decision, contending that the evidence relating to Carpenito's 1985 transactions was improperly excluded and that revocation, as opposed to suspension, was the appropriate remedy. The Judicial Officer agreed, holding that the evidence should have been admitted since it was relevant to the sanction decision and the complaint was sufficient to put Carpenito on notice that the agency would attempt to prove violations that occurred after the filing of that complaint. Id. at 71-72. In the absence of the proffer of any contrary information by Carpenito and in view of the fact that there did not seem any material dispute of fact concerning the evidence, the Judicial Officer held that it was appropriate for him to consider the evidence without remanding the matter for a further hearing.

The Judicial Officer concluded that in view of Carpenito's continued failure to make full payment promptly, the appropriate sanction for its willful, flagrant and repeated violations during 1983 and 1984 was revocation of its PACA license. Moreover, the Judicial Officer held that even

if a reviewing court should, disagree, it would not aid respondent. If complainant's methodology here, approved by the Judicial Officer, were, to be held unlawful, I would change the Department's sanction policy and not give respondents the opportunity to obtain a license suspension, rather than a license revocation, where there have been flagrant and repeated slow-payment violations such as those involved here.

Id. at 71 n.7 (emphasis in original). Accordingly, the Judicial Officer issued an order revoking Carpenito's PACA license. Carpenito then petitioned this court for review, seeking reversal of the Judicial Officer's decision to revoke its license and a remand to the agency for reinstatement of the ALJ's decision. (Carpenito did not appeal the agency's decision that it had committed willful, flagrant and repeated violations in 1983 and 1984 in violation of PACA.)

The major question on appeal is whether the Judicial Officer's decision to consider the documents concerning Carpenito's 1985 transactions, as opposed to remanding to the ALJ for further evidentiary hearings, violated due process. According to Carpenito, the Judicial Officer's application of 7 C.F.R. § 1.141(g)(7)(1987) -- which specifically allows such a course of conduct -- ...


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