O'Day v. George Arakelian Farms, Inc.

• Decision Date: 27 May 1976
• Docket Number: No. 73-1361,73-1361
• Citation: 536 F.2d 856
• Parties: Leonard O'DAY, dba Leonard O'Day Company, Petitioner-Appellant, v. GEORGE ARAKELIAN FARMS, INC., a California Corporation, Respondent-Appellee, United States of America, Intervenor.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 856

536 F.2d 856

Leonard O'DAY, dba Leonard O'Day Company, Petitioner-Appellant, v. GEORGE ARAKELIAN FARMS, INC., a California Corporation Respondent-Appellee United States of America, Intervenor.

No. 73-1361.

United States Court of Appeals Ninth Circuit.

May 27, 1976.

David Victor (argued), Phoenix, Ariz., for petitioner-appellant.

Joseph L. Moore (argued), of Burch, Cracchiolo, Levie, Guyer & Weyl, Phoenix, Ariz., for respondent-appellee.

Barbara Herwig, Atty. (argued), Dept. of Justice, Washington, D. C., for intervenor.

Before TUTTLE, ^* MERRILL, and BROWNING, Circuit Judges.

BROWNING, Circuit Judge:

Appellant challenges the constitutionality of the provision of the Perishable Agricultural Commodities Act of 1930, 7 U.S.C. § 499g(c), requiring a double bond to effectuate an appeal to a district court from a reparations award entered by the Secretary of Agriculture. The district court upheld the requirement. We reverse.

The principal purpose of the Perishable Agricultural Commodities Act is "to provide a practical remedy to small farmers and growers who were vulnerable to the sharp practices of financially irresponsible and unscrupulous brokers in perishable commodities." Chidsey v. Guerin, 443 F.2d 584, 587 (6th Cir. 1971). ¹ Accordingly, certain conduct by commission merchants, dealers, or brokers is declared to be unlawful. 7 U.S.C. § 499b. All commission merchants, dealers, and brokers are required to be licensed. Id. § 499c. Any person may complain to the Secretary of Agriculture of an alleged violation of the statutory code of conduct. Id. § 499f. If after notice and hearing or default the Secretary determines that the licensee has violated the statutory code, he may order the offender to make reparations to the complainant. Id. § 499g(a). The licensee may appeal to a federal district court, but the appeal is not effective unless the appellant files "a bond in double the amount of the reparation awarded against the appellant conditioned upon the payment of the judgment entered by the court, plus interest and costs, including a reasonable attorney's fee for the appellee, if the appellee shall prevail." Id. § 499g(c). If the licensee does not perfect an appeal from the reparations order, or pay it, his license is suspended for a period of either two or three years. Id. §§ 499g(d), 499d(b)(D) & (c).

Appellee complained to the Secretary that appellant owed appellee $22,089.80 for twenty truckloads of lettuce. The Secretary found for appellee. Appellant filed a timely appeal from the Secretary's reparation order. In a petition and supporting affidavit accompanying the notice of appeal, appellant asserted that because of his financial condition he was unable to post a bond in the amount of.$46,173.60, double the amount of the damage award plus $997 costs, as required by section 499g(c). He further asserted that if his license to deal in perishable agricultural commodities were suspended it would be impossible for him to earn a living because his age precluded adoption of a new occupation. He asked that he be allowed to pursue his appeal without posting a double bond. He contended that, as applied to him, the double bond requirement violated due process and denied equal protection of the law because the amount required was far in excess of that needed to pay both the reparation award and appellee's attorneys' fees and expenses on appeal, and because this requirement, in practical effect, would deny appellant access to judicial review, result in the automatic suspension of his license, and leave him without a gainful occupation. The district court denied the petition and dismissed the appeal. ²

Appellant's claim does not fall within the rationale of Boddie v. Connecticut, 401 U.S. 371, 91 S.Ct. 780, 28 L.Ed.2d 113 (1971). Appellant was afforded a full and fair administrative hearing before the Secretary ordered him to pay appellee or suffer suspension of his license. He was represented by counsel and presented witnesses before a neutral hearing officer who issued a lengthy written opinion discussing the facts and applying the law. Appellant does not challenge the adequacy of this hearing. The double bond requirement may bar judicial review, but it does not exclude appellant "from the only forum effectively empowered to settle" his dispute. Boddie v. Connecticut, supra, 401 U.S. at 376, 91 S.Ct. at 785. ³ See Ortwein v. Schwab, 410 U.S. 656, 658-60, 93 S.Ct. 1172, 35 L.Ed.2d 572 (1973); Chidsey v. Guerin, supra, 443 F.2d at 588; cf. Bell v. Burson, 402 U.S. 535, 542-43, 91 S.Ct. 1586, 29 L.Ed.2d 90 (1971); Goldberg v. Kelly, 397 U.S. 254, 266, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970). Nor is the deprivation appellant faces of the same constitutional significance as the interest at stake in Boddie. See Chidsey v. Guerin, supra, 443 F.2d at 587; Zwick v. Freeman, 373 F.2d 110, 117-19 (2d Cir. 1967); cf. United States v. Kras, 409 U.S. 434, 444-45, 93 S.Ct. 631, 34 L.Ed.2d 626 (1973); Ortwein v. Schwab, supra, 410 U.S. at 659, 93 S.Ct. 1172.

The rationale of Lindsey v. Normet, 405 U.S. 56, 92 S.Ct. 862, 31 L.Ed.2d 36 (1972), however, entitles appellant to relief. The Court held that the Equal Protection clause was violated by a provision of the Oregon Forcible Entry and Wrongful Detainer Statute requiring a lessee who wished to appeal to file a bond for the payment of twice the rental value of the premises from the time the action was commenced until final judgment. "When an appeal is afforded," the Court said, "it cannot be granted to some litigants and capriciously or arbitrarily denied to others without violating the Equal Protection Clause." Id. at 77, 92 S.Ct. at 876. The Court noted "that the double-bond requirement heavily burdens the statutory right . . . to appeal." While the state could require adequate security to preserve an award already made and otherwise protect appellee against loss during appeal, the Court observed that the double bond requirement did not effectuate these purposes in the circumstances presented in Lindsey. Id. at 77-78, 92 S.Ct. 862. The claim that the double bond requirement screened out frivolous appeals was also "unpersuasive, for it not only bars nonfrivolous appeals by those who are unable to post the bond but also allows meritless appeals by others who can afford the bond." Id. at 78, 92 S.Ct. at 876.

Procedural provisions to protect litigated property and discourage unsubstantial appeals are valid, the Court said, if "reasonably tailored to achieve these ends and uniformly and nondiscriminatorily applied." But the state did not seek to protect the prior award. Instead, it "automatically doubled the stakes when a tenant seeks to appeal an adverse judgment . . . . Id. at 79, 92 S.Ct. at 877. This discriminated against those who could not post a double bond. " For them, as a practical matter, appeal is foreclosed, no matter how meritorious their case may be." Id. at 79, 92 S.Ct. at 877. Nonindigent lessees were also aggrieved for they were "confronted by a substantial barrier to appeal faced by no other civil litigant . . . ." This discrimination, the Court concluded, was "arbitrary and irrational," and therefore violated the Equal Protection Clause. Id. at 79, 92 S.Ct. at 877.

Since the Supreme Court's "approach to Fifth Amendment equal protection claims has always been precisely the same as to equal protection claims under the Fourteenth Amendment" (Weinberger v. Wiesenfeld, 420 U.S. 636, 638 n.2, 95 S.Ct. 1225, 1228, 43 L.Ed.2d 514 (1975); see also Weinberger v. Salfi,422 U.S. 749, 772, 95 S.Ct. 2457, 45 L.Ed.2d 522 (1975); cf. Hampton v. Mow Sun Wong, --- U.S. ----, ----, 96 S.Ct. 1895, 48 L.Ed.2d ---- (1976), the same reasoning applies to the double bond requirement of the Perishable Agricultural Commodities Act. As applied to the appellant in this case, the double bond requirement is not reasonably or rationally related to a legitimate governmental purpose and constitutes an effective bar to appeal. It therefore arbitrarily denies appellant and similarly situated litigants the statutory right to appeal.

The stated purpose of the double bond requirement was "to discourage frivolous appeals taken for the purpose of delaying payment and thereby tending to defeat the purpose of the act." House Report No. 915, 75th Cong., 1st Sess., at 3 (1937). As noted, Lindsey expressly held that there is no rational relation between this admittedly legitimate purpose and a double bond requirement.

The statute recites that the bond shall be "conditioned upon the payment of the judgment entered by the court, plus interest and costs, including a reasonable attorney's fee for the appellee, if appellee shall prevail." 7 U.S.C. § 499g(c). As Lindsey recognizes, the state may properly condition the right to appeal upon posting security sufficient to protect appellee from loss of damages already awarded, interest, and (as established by Cohen v. Beneficial Loan Corp., 337 U.S. 541, 552, 69 S.Ct. 1221, 93 L.Ed. 1528 (1941)) costs on appeal, including a reasonable attorney's fee. ⁴

Lindsey also makes clear, however, that the requirement imposed must be rationally related to securing the risk involved. Legislative categories need not be drawn with "mathematical nicety" (Dandridge v. Williams, 397 U.S. 471, 485, 90 S.Ct. 1153, 25 L.Ed.2d 491 (1970)), for classification necessarily involves approximation; but legislative classifications which are not only imprecise, but lack rational relationship to their avowed purpose, are invalid. United States Department of Agriculture v. Moreno, 413 U.S. 528, 538, 93 S.Ct. 2821, 37 L.Ed.2d 782 (1973). ⁵

To the extent that the bond required by section 499g(c) reflects the amount of the reparation award it directly serves a valid purpose. The automatic doubling of this amount, however, has no rational relationship to the payment of interest on the award and costs of appeal. If the claim is small the product will be wholly inadequate;...