American Raisin Packers v. U.S. Dept. of Agr.
| Decision Date | 05 March 2002 |
| Docket Number | No. CIV.F 01-5606 AWI SM.,CIV.F 01-5606 AWI SM. |
| Court | U.S. District Court — Eastern District of California |
| Parties | AMERICAN RAISIN PACKERS, INC, a California corporation, Plaintiff, v. UNITED STATES DEPARTMENT OF AGRICULTURE, Defendant |
Brian C. Leighton, Law Offices of Brian Leighton, Clovis, CA, for Plaintiff.
John K. Vincent, U.S. Atty., Sacramento, CA, E. Robert Wright, U.S. Atty's Office, Fresno, CA, for Defendant.
ORDER DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT AND GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
This action is an appeal of a decision by the United States Department of Agriculture ("USDA") that resulted in Plaintiff American Raisins Packers, Inc.'s disbarment from inspection services for one year. This court has jurisdiction pursuant to 28 U.S.C. § 1331 and 28 U.S.C. § 1346(a)(2).
Plaintiff is a processor of California raisins. In August 1998, Plaintiff sold raisins to the USDA pursuant to USDA Invitation Number 21, issued on June 3, 1998, soliciting bids for Thompson Seedless Raisins for domestic feeding programs.
On December 3, 1998, the Agricultural Marketing Service ("AMS"), an agency of the USDA, filed a complaint before the Secretary of Agriculture. The complaint was filed pursuant to the Agricultural Marketing Act of 1946, as amended, 7 U.S.C. §§ 1621-1632, and the regulations and standards issued under the Agricultural Marketing Act, 7 C.F.R. Part 52. The complaint alleged that between August 5 and August 11, 1998, Plaintiff violated 7 C.F.R. § 52.54 by misrepresenting Golden Raisins as Thompson Seedless Raisins.
On May 24, 2000, a hearing was held in Fresno, California before an Administrative Law Judge ("ALJ") of the USDA. On November 21, 2000, the ALJ issued a decision. The ALJ found that Plaintiff's failure to provide 100% Thompson Seedless Raisins to the USDA for sampling constituted a misrepresentation and a violation of 7 C.F.R. § 52.54. Specifically, the ALJ found Plaintiff had misrepresented the product that it had presented for inspection as being 100% Natural Thompson Seedless Raisins because some of the containers had Golden Raisins, which contained sulphur, in them. The ALJ barred Plaintiff from receiving inspection services for one year.
Plaintiff appealed the decision to a Judicial Officer ("JO") for the USDA, to whom the Secretary of the Agriculture has delegated the authority to issue final decisions of the USDA. Plaintiff contended that there should be no debarment because there was no finding of any willfulness in the violation. The AMS also appealed to the JO, arguing that the debarment should have been for four years. On May 1, 2001, the JO issued a decision. The JO adopted the ALJ's decision and order with minor modifications and upheld the one year debarment.
On May 18, 2001, Plaintiff filed a complaint for review of an administrative decision under the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 702-706. The complaint alleges that the USDA's decision must be set aside pursuant to 5 U.S.C. § 706 because the decision and order is arbitrary, capricious, an abuse of discretion, not in accordance with law, and in excess of statutory jurisdiction and authority. The complaint also contends that 7 C.F.R. § 52.54 does not permit debarment from inspection services for negligent misrepresentation. The complaint alleges that 7 C.F.R. § 52.54 requires willfulness, which the ALJ and JO found was not present in this case.
On November 13, 2001, Plaintiff filed a motion for summary judgment. Plaintiff contends that 7 C.F.R. § 52.54 allows debarment for only intentional acts of fraud, misrepresentation, or deceptive practices. Because the ALJ and JO both found there was no willfulness or deceptive or fraudulent acts or practices, Plaintiff believes section 52.54 does not apply. Plaintiff's brief offers three proposed undisputed facts concerning the conclusions of the ALJ and JO that Plaintiff's conduct was not intentional.2
On December 17, 2001, Defendant filed an opposition to Plaintiff's motion. Defendant agrees that the JO found Plaintiff's conduct was a misrepresentation and was not willful. Defendant's characterize Plaintiff's actions as a failure to take steps to assure the applicable inspection regulations were followed or a negligent misrepresentation. However, Defendant contends these non-willful actions still constitute a violation of section 52.54. Concerning Plaintiff's proposed statement of undisputed facts, Defendant states that it does not object to the decision of the JO and requests the court review the entire decision.
On December 17, 2001, Defendant filed its own motion for summary judgment. Defendant contends that the JO's decision is supported by substantial evidence. Defendant contends Plaintiff violated section 52.54(a) by misrepresenting that the raisins it was packing were only Thompson Seedless Raisins when Golden Raisins, which contained sulphur, were also mixed in with the Thompson Seedless Raisins. Defendant contends that the inspection regulations and facts support Plaintiff being debarred for one year for violating section 52.54. Defendant also provides proposed undisputed facts which concern the evidence admitted during the administrative process.
On January 11, 2002, Plaintiff filed a reply to Defendant's opposition to Plaintiff's motion for summary judgment along with an opposition to Defendant's motion for summary judgment. Plaintiff argues that its debarment means that Plaintiff will have to shut down its business, and the court should recognize the harshness of this penalty when evaluating whether negligent or unintentional conduct violates section 52.54. Plaintiff again argues that section 52.54 only allows debarment for intentional acts of fraud, misrepresentation, or deceptive practices. Plaintiff's brief does not respond to Defendant's proposed undisputed facts.
On February 6, 2002, Defendant filed a reply to Plaintiff's reply to Defendant's opposition to Plaintiff's motion for summary judgment.3
On February 25, 2002, the court held a hearing. At the hearing, the parties agreed that the issue in this action is whether section 52.54 requires an intent to commit a misrepresentation beyond that found by the ALJ and JO.
Summary judgment shall be granted when the undisputed facts entitle the moving party to judgment as a matter of law. Fed.R.Civ.P. 56(c). Summary judgment motions are particularly appropriate where, as here, the court's review is of an administrative record. See Adams v. United States, 318 F.2d 861, 865 (9th Cir. 1963).
When a motion for summary judgment is before the court, the court is ordinarily guided by the standards articulated in Federal Rule of Civil Procedure 56(c), which provides that summary judgment is appropriate when there exists no genuine issue of material fact and the moving party should prevail as a matter of law. When the court is called upon to review an agency decision, however, the standards for summary judgment are modified by 5 U.S.C. § 706(2), at least with respect to factual disputes. The question is not whether there is a genuine issue of material fact, but rather whether the agency action was arbitrary, capricious, an abuse of discretion, not in accordance with law, or unsupported by substantial evidence on the record taken as a whole.
Sacramento Regional County Sanitation Dist. v. Thomas, 668 F.Supp. 1427, 1430-31 (E.D.Cal.1987) (citations omitted), reversed on other grounds by Sacramento Regional County Sanitation Dist. v. Reilly, 905 F.2d 1262 (9th Cir.1990).
When reviewing an agency decision, the court must first decide whether the agency acted within the scope of its authority. Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 415, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971). This requires the court to ascertain the scope or range of the agency's authority and discretion and determine whether the agency's decision was within that range. Id. at 415-16, 91 S.Ct. 814. Second, the court must review the agency's decision and "hold unlawful and set aside agency action, findings, and conclusions" which are "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law," "contrary to constitutional right," or "unsupported by substantial evidence." 5 U.S.C. §§ 706(2)(A), (B), (E).
In determining whether an agency decision is arbitrary, capricious, or an abuse of discretion, the court determines whether the agency "considered the relevant factors and articulated a rational connection between the facts found and the choice made." Resources Ltd. v. Robertson, 35 F.3d 1300, 1304 (9th Cir.1993); see also Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983). When reviewing an agency's decision, the court must consider whether the decision was based on consideration of the relevant factors and whether there has been a clear error of judgment. Motor Vehicle Mfrs. Ass'n, 463 U.S. at 43, 103 S.Ct. 2856. Agency action is arbitrary and capricious if the agency relied on factors which Congress had not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise. Id.
"Substantial evidence" within the meaning of 5 U.S.C. § 706(2)(E) is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Western Truck Manpower, Inc. v. United States Dep't of Labor, 12 F.3d 151, 153 (9th Cir.1993) (quoting Richardson v. Perales, 402 U.S. 389, 401, 91 S.Ct. 1420, 28 L.Ed.2d 842 (1971)). To determine if an agency's decision is supported by substantial evidence, the court must ...
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