Bama Tomato Co. v. U.S. Dept. of Agriculture, 95-6778

• Decision Date: 29 May 1997
• Docket Number: No. 95-6778,95-6778
• Citation: 112 F.3d 1542
• Parties: 10 Fla. L. Weekly Fed. C 973 BAMA TOMATO COMPANY, Petitioner, v. UNITED STATES DEPARTMENT OF AGRICULTURE, Respondent
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1542

112 F.3d 1542

10 Fla. L. Weekly Fed. C 973

BAMA TOMATO COMPANY, Petitioner, v. UNITED STATES DEPARTMENT OF AGRICULTURE, Respondent.

No. 95-6778.

United States Court of Appeals, Eleventh Circuit

May 29, 1997.

Hartley B. Martyn, Joseph P. McCafferty, Mark A. Amendola, Martyn & Associates, Cleveland, OH, for Appellant.

Barbara S. Good, M. Bradley Flynn, U.S. Dept. of Agriculture, Office of General Counsel, Washington, DC, for Appellee.

Petition for Review of a Decision and Order of the Secretary of Agriculture.

Before BIRCH, BLACK and CARNES, Circuit Judges.

BIRCH, Circuit Judge:

In this appeal from a decision and order of the Secretary of Agriculture, we decide three issues related to the employment bar provision of the Perishable Agricultural Commodities Act, 1930, 7 U.S.C. § 499h(b): (1) whether the employment bar provision is unconstitutionally vague and overbroad; (2) whether a licensed employer can challenge a previous determination that an employee is barred from employment by a licensee; and (3) whether a thirty-day suspension of the employer's license was legally warranted and factually justified. The Secretary, through a judicial officer, approved the administrative law judge's conclusion that Bama Tomato Company had violated the employment bar provision but increased the fourteen-day suspension imposed by the administrative law judge to a thirty-day suspension. We affirm.

I. BACKGROUND

The Secretary of Agriculture ("Secretary"), through a judicial officer, issued a decision and order in October 1992 in which he determined that Mims Produce, Inc. had failed to make full payment promptly to sellers and brokers as required by the Perishable Agricultural Commodities Act, 1930 ("PACA"), 7 U.S.C. §§ 499a-499s. The judicial officer found repeated and flagrant violations of 7 U.S.C. § 499b and revoked the license of Mims Produce. Jimmy Mims ("Mims") subsequently was notified that the Secretary had determined him to be "responsibly connected" ¹ with Mims Produce during the relevant violations. The United States Department of Agriculture ("USDA") further informed Mims that he was barred from employment in any capacity by another licensee until November 1993 and thereafter only with prior approval of the Secretary and the posting of a satisfactory bond. ² Neither Jimmy Mims nor Mims Produce challenged these employment restrictions. ³

In 1992, Mims began working for Bama Tomato Company ("Bama"), an Alabama produce dealer and a PACA licensee, ⁴ as the supervisor of its repacking crew. In January 1993, the USDA first notified Bama that Mims could not continue to be employed by Bama after February 1993. ⁵ The parties stipulated that Bama removed Mims from the payroll but that, during the period from February 1993 until March 1994, he continued to work, at least sporadically, with Bama's repacking and shipping operations. ⁶ Also during that period, Mims signed, in the absence of Bama's president, at least twenty-two checks for Bama and executed a lease renewal for Bama's business premises. In July 1994, the USDA filed a complaint against Bama, which alleged that Bama was violating section 499h(b) by continuing to employ Jimmy Mims from February 1993 to March 1994. ⁷

An administrative law judge ("ALJ") concluded that Bama had violated the employment bar provisions and assessed a fourteen-day suspension of Bama's license as a sanction for the violation. Although the ALJ noted that a thirty-day suspension would be appropriate, he considered several mitigating factors, including Bama's record as a financially responsible company and the effect of a suspension on Bama's employees, and reduced the suspension to fourteen days. The USDA appealed the ALJ's ruling to the Secretary and Bama cross-appealed. The Secretary, through a judicial officer, affirmed the ALJ's determination that Bama had violated section 499h(b) by continuing to employ Mims after notification that his employment was illegal. ⁸ The judicial officer, however, rejected the ALJ's consideration of mitigating factors and increased Bama's suspension to thirty days. ⁹ Bama appeals the decision and order of the judicial officer.

II. DISCUSSION

Congress enacted the PACA in 1930 to prevent unfair business practices and promote financial responsibility in the interstate commerce of shipping and handling of perishable agricultural commodities, like fresh fruits and vegetables. George Steinberg and Son, Inc. v. Butz, 491 F.2d 988, 990 (2d Cir.1974). The statute requires that brokers and dealers be licensed by the Secretary, 7 U.S.C. §§ 499c-499d, and that licensees refrain from unfair business conduct, 7 U.S.C. § 499b(4). The PACA also provides a system of penalties for these violations. The Secretary may revoke or suspend the license of a licensee who fails to "make full payment promptly" for perishable shipments. 7 U.S.C. § 499b(4); see 7 U.S.C. § 499h(a). Furthermore, section 499h(b) empowers the Secretary to restrict employment within the industry of "any person who is or has been responsibly connected with" such a violator. "Employment" is defined broadly as "any affiliation of any person with the business operations of a licensee, with or without compensation, including ownership or self-employment." 7 U.S.C. § 499a(b)(10).

We uphold a USDA decision under the PACA unless we find the decision to be unconstitutional, arbitrary, capricious, an abuse of discretion, or in excess of statutory authority. 5 U.S.C. § 706(2). We uphold the USDA's factual findings if they are supported by substantial evidence. See Federal Trade Comm'n v. Indiana Fed'n of Dentists, 476 U.S. 447, 454, 106 S.Ct. 2009, 2015-16, 90 L.Ed.2d 445 (1986). Substantial evidence means "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 217, 83 L.Ed. 126 (1938). We review legal issues de novo but "even in considering such issues [we] give some deference to the [agency's] informed judgment." Indiana Fed'n of Dentists, 476 U.S. at 454, 106 S.Ct. at 2015.

Bama voices three challenges to the Secretary's decision. First, Bama contends that section 499h(b) is unconstitutional on its face. Second, Bama argues that Mims was not responsibly connected with Mims Produce and, therefore, should not be subject to employment restrictions. Third, Bama argues that the Secretary erred in ignoring mitigating factors and imposing a disproportionately harsh sanction.

A. Constitutionality of the Employment Bar Provision

The employment bar provision of the PACA has survived numerous constitutional challenges. See, e.g., Siegel v. Lyng, 851 F.2d 412, 416-18 & n. 12 (D.C.Cir.1988) (rejecting claims that the employment bar provision violates the Due Process Clause or the prohibition of bills of attainder); Zwick v. Freeman, 373 F.2d 110, 117-20 (2d Cir.1967) (finding no violation of the Fifth Amendment right to earn a livelihood or the Eighth Amendment right to be free from cruel and unusual punishment and rejecting the claim that the employment bar is a bill of attainder); Birkenfield v. United States, 369 F.2d 491, 494 (3d Cir.1966) (finding no violation of the Due Process Clause when a person, falling within the statutory definition of "responsibly connected," is barred from employment without a hearing). Bama, however, raises an issue of first impression by alleging that the provision is unconstitutionally vague and overbroad on its face. Specifically, Bama contends that the statutory definition of "employment" as "any affiliation" implicates First Amendment rights of free speech and association and should be found unconstitutional.

The Supreme Court set forth the proper analysis for such a facial challenge in Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 102 S.Ct. 1186, 71 L.Ed.2d 362 (1982):

In a facial challenge to the overbreadth and vagueness of a law, a court's first task is to determine whether the enactment reaches a substantial amount of constitutionally protected conduct. If it does not, then the overbreadth challenge must fail. The court should then examine the facial vagueness challenge and, assuming the enactment implicates no constitutionally protected conduct, should uphold the challenge only if the enactment is impermissibly vague in all of its applications.

Id. at 494-95, 102 S.Ct. at 1191 (footnotes omitted). Thus, we first determine whether the employment bar provision reaches First Amendment rights.

To determine whether the provision reaches "a substantial amount of constitutionally protected activity," we consider both the ambiguous and unambiguous scope of the provision. See id. at 494 n. 6, 102 S.Ct. at 1191 n. 6. The Secretary argues that the provision does not implicate the First Amendment at all and instead regulates employment practices that are outside the reach of the First Amendment. The challenged provision defines "employment" as "any affiliation ... with the business operations of a licensee, with or without compensation, including ownership or self employment." 7 U.S.C. § 499a(b)(10) (emphasis added). Thus, employment and employment-like activity are unambiguously prohibited because they involve affiliation with "business operations." We find this unambiguous restriction to be constitutional. See Nebbia v. New York, 291 U.S. 502, 527-28, 54 S.Ct. 505, 512, 78 L.Ed. 940 (1934) ("The Constitution does not guarantee the unrestricted privilege to engage in a business or to conduct it as one pleases.").

Bama argues that the employment bar provision, because of its ambiguity, chills free speech and association because a licensee and a person who is barred from employment could be found to violate the provision by simply "affiliating" ¹⁰ with each other. ¹¹ In making this argument, Bama overlooks the language in the statute that restricts the definition of "employment" to "any affiliation ... with the business operations...