Balice v. USDA, 98-16766

• Decision Date: 08 February 2000
• Docket Number: No. 98-16766,98-16766
• Citation: 203 F.3d 684
• Parties: (9th Cir. 2000) VITO BALICE, individually and as the Agent of O. R. C. Company, Plaintiff-Appellant, v. U.S. DEPARTMENT OF AGRICULTURE, OPINION Defendant-Appellee
• Court: U.S. Court of Appeals — Ninth Circuit

Page 684

203 F.3d 684 (9th Cir. 2000)

VITO BALICE, individually and as the Agent of O. R. C. Company, Plaintiff-Appellant, v. U.S. DEPARTMENT OF AGRICULTURE, OPINION Defendant-Appellee.

No. 98-16766

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted January 11, 2000

Filed February 8, 2000

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] COUNSEL: Brian C. Leighton, Clovis, California, for the plaintiffappellant.

M. Bradley Flynn, United States Department of Agriculture, Washington, D. C., for the defendant-appellee.

Appeal from the United States District Court for the Eastern District of California; Anthony W. Ishii, District Judge, Presiding. D.C. No. CV-92-05483-AWI

Before: Ellsworth A. Van Graafeiland,¹ Arthur L. Alarcon, and Barry G. Silverman, Circuit Judges.

ALARCON, Circuit Judge:

Vito Balice ("Balice") appeals from the district court's final order affirming the judicial officer's ("JO") decision to assess a $225,500 civil penalty against him pursuant to S 608c(14)(B) of the Agricultural Marketing Agreement Act of 1937 ("AMAA"). The JO assessed a civil penalty of $9,500 individually against Balice and a civil penalty of $216,000 jointly and severally against Balice and his two uncles, Onofrio Calabrese and Rocco Calabrese ("Calabreses"), for violating various provisions of the Almond Marketing Order during the 1987-1988 crop year. Balice contends that the JO's decision to assess the penalty was arbitrary and capricious and in violation of the Eighth Amendment's prohibition against excessive fines. We have jurisdiction pursuant to 28 U.S.C. S 1291. We affirm, because we conclude that the JO's determinations were supported by substantial evidence, that the JO's choice of sanction was neither unwarranted in law nor without justification in fact, and that the amount of the fine was not constitutionally excessive.

I

During the 1987-1988 crop year, Balice and the Calabreses, doing business as the O.R.C. Company, operated as handlers of almonds grown in California. See 7 C.F.R.S 981.13 (1987). As handlers of California almonds, they were subject to regulation under both the AMAA and the Almond Marketing Order. See 7 U.S.C. S 608c(1), (2), (6); 7 C.F.R. SS 981.1981.474 (1987). For the 1987-1988 crop year, the Almond Marketing Order required every handler of almonds to

(1) keep certain records during the course of the almond season and for two years following the end of the season (the "record keeping requirement"),

(2) furnish in a timely manner certain reports to the Almond Board of California (the "Almond Board") (the "reporting requirement"),

(3) maintain a reserve, and thus withhold from handling, an amount of almonds equal to 18% of the "kernel weight" of all almonds received for the handler's account (the "reserve requirement"), and

(4) dispose of the "kernel weight" of inedible almonds either to the Almond Board or to secondary outlets by a certain date (the "inedible disposition requirement").

Section S 608c(14)(B) of the AMAA authorized the Secretary of the USDA ("Secretary") to assess a civil penalty against a handler in an amount up to $1,000 for each violation of the Almond Marketing Order and directed the Secretary to treat each day in which the handler was in violation of the order as a separate violation. Id.

On January 5, 1990, the Administrator of the Agricultural Marketing Service, a branch of the U.S. Department of Agriculture ("USDA"), initiated a disciplinary proceeding against Balice and the Calabreses alleging that they had violated the record keeping, the reporting, the reserve, and the inedible disposition requirements of the Almond Marketing Order during the 1987-1988 crop year. Balice and the Calabreses filed answers denying those allegations. A two day administrative hearing was held before an administrative law judge ("ALJ") in March of 1991. Balice was represented by counsel and testified at the hearing. The Calabreses, who are citizens of Italy, were represented by separate counsel, but did not appear at the hearing.

The ALJ found that Balice and the Calabreses violated the record keeping, the reporting, the reserve, and the inedible disposition requirements of the Almond Marketing Order during the 1987-1988 crop year. The ALJ then assessed a civil penalty jointly and severally against the three in the amount of $216,000. That penalty consisted of fines in the amount of

(1) $74,500 for continuous violations of the record keeping requirement,

(2) $1,000 for the failure to file one report and for the late filing of another report,

(3) $62,000 for continuous violations of the reserve require ment, and

(4) $78,500 for continuous violations of the inedible dispo sition requirement.

Balice appealed the decision to the JO. The USDA filed a cross-appeal contending that the fine should be increased to $582,000. The Calabreses did not file an appeal from the decision.

The JO adopted most of the ALJ's findings, added several new findings, and increased the civil penalty from $216,000 to $225,500. That penalty consisted of fines in the amount of

(1) $74,500 for the continuous violations of the record keep ing requirement (2) $2,000 for the failure to file one report and for the late filing of another report,

(3) $124,000 for the continuous violations of the reserve requirement, and

(4) $25,000 for the continuous violations of the inedible dis position requirement.

The JO determined that Balice was individually liable for $9,500 of the $225,500 penalty and that Balice and the Calabreses were jointly and severally liable for the remaining $216,000 of the penalty.

Balice filed a complaint in the district court seeking a review of the JO's decision and a declaration that the civil penalty was invalid. The district court concluded that there was substantial evidence to indicate that Balice had violated the record keeping, the reporting, the reserve, and the inedible disposition requirements of the Almond Marketing Order during the 1987-1988 crop year. It also found that the $225,500 penalty was neither arbitrary and capricious nor constitutionally excessive under the Eighth Amendment. Accordingly, the district court granted summary judgment in favor of the USDA. We review that decision de novo. See Balint v. Carson City, 180 F.3d 1047, 1050 (9th Cir. 1999) (en banc).

II

In this appeal, Balice contends that the JO erred in applying the penalty provisions of the AMAA. He argues that the JO should have considered "significant mitigating factors," such as his ability to pay the amount of the fine and his level of culpability, when assessing the penalty against him. He further argues that the JO's choice of sanction was arbitrary and capricious and that the JO's findings that he violated the record keeping and the inedible disposition requirements were not supported by substantial evidence.

Judicial review of an agency decision is narrow. We will not substitute our judgment for that of the agency. See Marsh v. Oregon Natural Resources Council, 490 U.S. 360, 378 (1989); Aluminum Co. of Amer. v. Administration, Bonneville Power Admin., 175 F.3d 1156, 1160 (9th Cir. 1999). Under the Administrative Procedures Act, we may only set aside an agency decision that is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. " 5 U.S.C. S 706(2)(A). We apply the substantial evidence standard when reviewing the factual findings of an agency. See Armstrong v. Commissioner of the Soc. Sec. Admin. , 160 F.3d 587, 589 (9th Cir. 1998). When reviewing a choice of sanction, we are limited to determining "whether, under the pertinent statute and relevant facts, the Secretary made an allowable judgment in choice of remedy." See Farley & Calfee, Inc. v. U.S. Dep't of Agric., 941 F.2d 964, 967 (9th Cir. 1991) (internal quotations omitted). We will not overturn a penalty unless it is either "unwarranted in law or unjustified in fact." Bosma v. U.S. Dep't of Agric., 754 F.2d 804, 810 (9th Cir. 1984) (citing Butz v. Glover Livestock Comm'n Co., 411 U.S. 182, 185-88 (1973)).

A

Balice contends that the JO erred in failing to consider "significant mitigating factors," such as his degree of culpability and his ability to pay a fine, when assessing the $225,500 civil penalty against him pursuant to S 608c(14)(B). The record shows, however, that the JO considered

the nature of the violations, the number of the viola tions, the damage or potential damage to the regula tory program from the type of violations involved here, the amount of profit potentially available to a handler who commits such violations, prior warnings or instructions given to Respondent Balice, and any other circumstances shedding light on the degree of culpability involved when assessing the penalty against Balice. In re Calabrese, 51 Agric. Dec. 131, 154-55 (1992). We need only decide whether, as Balice suggests, the JO was required to consider Balice's ability to pay the amount of fine imposed. It is clear from the express language of the AMAA and from the legislative history of S 602c(14)(B) that Congress did not intend to limit the USDA's discretion in that manner.

In 1987, Congress amended S 608c(14)(B) out of concern for the integrity of the market order program. See 1987 U.S. Code Cong. & Admin. News, 2313-1, 2313-29. Prior to the amendment, only the U.S. Attorney's Office was authorized to initiate disciplinary proceedings to enforce the terms and conditions of market orders. See id. Due to the large volume of cases before that office, however, and because AMAA disciplinary proceedings are both time consuming and cumbersome, few U.S. Attorneys took the time to prosecute violations of market orders. See id.

As a result, Congress amended the statute's penalty provisions to allow the Secretary to enforce the requirements of market orders through the use of civil penalties. See Omnibus Budget Reconciliation Act of 1987, Pub. L. No. 100-203, S 1501....