Hawkins v. Agricultural Marketing Service, Dept. of Agriculture, U.S.

• Decision Date: 21 December 1993
• Docket Number: No. 92-5147,92-5147
• Citation: 10 F.3d 1125
• Parties: 1993-2 Trade Cases P 70,448 David L. HAWKINS, Petitioner, v. AGRICULTURAL MARKETING SERVICE, DEPARTMENT OF AGRICULTURE, U.S.A., Respondent.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1125

10 F.3d 1125

1993-2 Trade Cases P 70,448

David L. HAWKINS, Petitioner, v. AGRICULTURAL MARKETING SERVICE, DEPARTMENT OF AGRICULTURE, U.S.A., Respondent.

No. 92-5147.

United States Court of Appeals, Fifth Circuit.

Dec. 21, 1993.

R. Charles Robb, Vicksburg, MS, for petitioner.

Raymond W. Fullerton, Asst. Gen. Counsel, Dept. of Agriculture, Washington, DC, for respondent.

On Petition for Review of a Final Order of the Secretary of Agriculture.

Before REYNALDO G. GARZA, KING and DeMOSS, Circuit Judges.

KING, Circuit Judge:

David L. Hawkins seeks review, pursuant to 28 U.S.C. Sec. 2342, of a final order of the administrator of the Agricultural Marketing Service of the United States Department of Agriculture. The administrator affirmed the presiding officer's decision, which found that Hawkins was "responsibly connected" with Fruit Jobbers, Inc., during a time when Fruit Jobbers committed "repeated and flagrant" violations of the Perishable Agricultural Commodities Act, 7 U.S.C. Sec. 499a et seq. We deny the petition for review and affirm the order.

I. BACKGROUND

Fruit Jobbers was incorporated in Mississippi and licensed as a dealer of perishable agricultural commodities by the United States Department of Agriculture (USDA), pursuant to the Perishable Agricultural Commodities Act (PACA), 7 U.S.C. Sec. 499a et seq. Its office was in Jackson, Mississippi. David L. Hawkins (Hawkins) began working at Fruit Jobbers in 1950. He became a shareholder in 1960, at which time he also became vice-president of the corporation. Eventually, Hawkins was a member of the board of directors. From the time he became a shareholder until August 1988, Hawkins received a salary and monthly stock dividends from Fruit Jobbers.

In August 1988, members of the Harrison family purchased approximately 78 percent of Fruit Jobbers' stock. At that time, Hawkins held approximately 22 percent of the stock. Following their purchase of the stock, the Harrison family removed Hawkins as an officer and a member of the board of directors. They also offered to purchase Hawkins' shares for the same price as they had purchased shares from other shareholders if Hawkins would sign a non-competition agreement, effective for five years and within a 150-mile radius of Jackson, Mississippi. Hawkins refused to sell his stock on those terms and resigned all positions and offices that he held with Fruit Jobbers on August 3, 1988. He received no salary or stock dividends from Fruit Jobbers after that date. He did, however, maintain his stock holdings. Hawkins subsequently went to work at D & D Produce, Hawkins' own produce business licensed under the PACA, and at Capitol City Produce as a buyer.

On July 7, 1989, Hawkins filed suit in the Chancery Court of Hinds County, Mississippi, against Fruit Jobbers and the Harrison family to force them to provide documentation of Fruit Jobbers' financial affairs. In the alternative, Hawkins petitioned the court to compel the Harrison family to buy his stock, or for the court to close the business and distribute the assets.

On February 1, 1990, before the chancery court litigation was completed, Fruit Jobbers filed a bankruptcy petition in federal district court seeking relief pursuant to Chapter 11 of the Bankruptcy Code. The bankruptcy petition did not list Hawkins as a shareholder, even though he still owned approximately 22 percent of Fruit Jobbers' stock.

The Director of the Fruit and Vegetable Division of the Agricultural Marketing Service (AMS) of the USDA filed an administrative complaint against Fruit Jobbers on August 31, 1990, alleging that during the period from July 1989 through February 1990, Fruit Jobbers purchased, received, and accepted--in interstate commerce--117 lots of perishable agricultural commodities but failed to make full payment promptly of the agreed purchase prices, which totaled $324,246.87. Thus, Fruit Jobbers was alleged to have violated 7 U.S.C. Sec. 499b(4). ¹

Shortly thereafter, the AMS notified Hawkins that because he owned approximately 22 percent of Fruit Jobbers' stock when the corporation allegedly violated PACA provisions, he was determined to be "responsibly connected" with the corporation pursuant to 7 U.S.C. Sec. 499a(b)(9). Hawkins then filed a petition for review of the AMS decision. On December 20, 1990, the AMS referred Hawkins' petition to the presiding officer.

An administrative law judge issued a default order against Fruit Jobbers on January 11, 1991, finding that Fruit Jobbers had committed willful, flagrant, and repeated violations of 7 U.S.C. Sec. 499b and that therefore Fruit Jobbers' license would be revoked pursuant to 7 U.S.C. Sec. 499h. That order became final on February 27, 1991.

A hearing concerning Hawkins' "responsible connection" to Fruit Jobbers was held in Jackson, Mississippi, on July 16, 1991, before the presiding officer. The presiding officer issued his decision on May 11, 1992, in which he found Hawkins "responsibly connected" with Fruit Jobbers when Fruit Jobbers committed PACA violations because Hawkins was a holder of more than ten percent of Fruit Jobbers' stock during that time. Hawkins thus became subject to the PACA's employment restrictions, ² which mandate that Hawkins is barred from employment by any PACA licensee for a minimum period of one year. The administrator of the AMS affirmed the presiding officer's decision on November 9, 1992. Hawkins now seeks review of the administrator's final order.

II. STANDARD OF REVIEW

This court upholds an agency's decision unless we determine it to be arbitrary, capricious, or an abuse of discretion. 5 U.S.C. Sec. 706(2)(A). We uphold an agency's factual findings if they are supported by substantial evidence. Faour v. United States Dep't of Agric., 985 F.2d 217 (5th Cir.1993) (citing Federal Trade Comm'n v. Indiana Fed'n of Dentists, 476 U.S. 447, 454, 106 S.Ct. 2009, 2015, 90 L.Ed.2d 445 (1986)). The substantial evidence standard requires only that an agency decision be supported by " 'such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.' " Universal Camera Corp. v. NLRB, 340 U.S. 474, 477, 71 S.Ct. 456, 458, 95 L.Ed. 456 (1951) (quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 216, 83 L.Ed. 126 (1938)).

Legal issues, however, are " 'for the courts to resolve, although even in considering such issues the courts are to give some deference to the [agency's] informed judgment.' " Faour, 985 F.2d at 219 (quoting Federal Trade Comm'n, 476 U.S. at 454, 106 S.Ct. at 2015). Our review of an agency's construction of a statute must give effect to the unambiguously expressed intent of Congress. Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 2781-82, 81 L.Ed.2d 694 (1984).

III. DISCUSSION

Hawkins first asserts that the presiding officer erred in applying a per se standard in determining whether Hawkins was "responsibly connected" with Fruit Jobbers and not considering evidence which demonstrated that Hawkins was not in fact responsible for any of Fruit Jobbers' PACA violations. Hawkins further asserts that the per se analysis used by the presiding officer violates Hawkins' right to equal protection under the law, as guaranteed by the Fifth Amendment, and that any employment sanctions imposed upon him as a result of the presiding officer's decision violate his Fifth Amendment due process rights. He also contends that the presiding officer's decision reflecting Fruit Jobbers' flagrant or repeated PACA violations is not supported in the record by substantial evidence. We address each of Hawkins' contentions in turn.

A. "Responsibly Connected"

Hawkins first contends that the presiding officer erred in applying a per se analysis to Sec. 499a(b)(9), which defines "responsibly connected." Instead, according to Hawkins, the presiding officer should have construed the language of Sec. 499a(b)(9) as a "rebuttable presumption" to afford a person falling within one of the categories delineated therein to demonstrate that he was not actually responsibly connected to the offending corporate licensee.

Hawkins argues, in essence, for an interpretation under which a person would be presumed "responsibly connected" if he fits into any of the three categories listed in Sec. 499a(b)(9), but would be allowed to rebut this presumption by proving that his position was a nominal one. Thus, Hawkins argues that because he was a minority shareholder and had resigned all of his positions with Fruit Jobbers before the alleged violations occurred, receiving no economic benefit from Fruit Jobbers and taking no effective part whatsoever in the control of the corporation, he was not "responsibly connected" to Fruit Jobbers.

Section 499a(b)(9) defines "responsibly connected" as

affiliated or connected with a commission merchant, dealer, or broker as (A) partner in a partnership, or (B) officer, director, or holder of more than 10 per centum of the outstanding stock of a corporation or association.

In Faour, 985 F.2d at 219-21, a panel of this court was presented with the precise issue Hawkins now raises. In determining whether Sec. 499a(b)(9) fostered an interpretation which reads a "rebuttable presumption" into the statute, this Court stated:

We find the plain meaning of this statute unambiguous. If a person is an officer or director of, or holds over ten percent of the outstanding stock of, a corporation that has been found to have committed any flagrant or repeated violation of section 499b, that person is considered "responsibly connected" and subject to sanctions under PACA. The statute is explicit: If a person falls within one of the three enumerated categories, he is responsibly connected. The statute does not contemplate a defense that allows a person to show that even though he fits into one of the three categories, he never had enough actual authority to be considered truly responsibly...