Lion Raisins, Inc. v. U.S. Dept. of Agriculture, 1:08-CV-00358-OWW-SMS.

• Citation: 636 F.Supp.2d 1081
• Decision Date: 13 July 2009
• Docket Number: No. 1:08-CV-00358-OWW-SMS.,1:08-CV-00358-OWW-SMS.
• Parties: LION RAISINS, INC., Plaintiff, v. UNITED STATES DEPARTMENT OF AGRICULTURE, Defendant.
• Court: U.S. District Court — Eastern District of California

636 F.Supp.2d 1081

LION RAISINS, INC., Plaintiff, v. UNITED STATES DEPARTMENT OF AGRICULTURE, Defendant.

No. 1:08-CV-00358-OWW-SMS.

United States District Court, E.D. California.

July 13, 2009.

COPYRIGHT MATERIAL OMITTED

James A. Moody, Phv, Law Office of James A. Moody, Washington, DC, Wesley Tracy Green, Corporate Counsel of Lion Raisins, Inc., Selma, CA, for Plaintiff.

Benjamin E. Hall, United States Attorney, Fresno, CA, for Defendant.

MEMORANDUM DECISION AND ORDER RE CROSS-MOTIONS FOR SUMMARY JUDGMENT

OLIVER W. WANGER, District Judge.

I. INTRODUCTION

Before the court are cross-motions for summary judgment filed by Defendant United States Department of Agriculture ("USDA") and Plaintiff Lion Raisins, Inc. ("Lion"). The parties seek summary judgment on Lion's claims asserted in its First Amended Complaint ("FAC"). Most of these claims arise under the Freedom of Information Act ("FOIA"), 5 U.S.C. § 552, et seq.

The following background facts are taken from the parties' submissions in connection with the motion and other documents on file in this case.

II. BACKGROUND

A. Lion And The Investigation Into Its Purported Misconduct

Lion, a family-owned business since 1903, is the largest raisin packer and raisin exporter in California. Lion prides itself on its ability to guarantee exacting standards of quality and condition that are demanded by its overseas buyers.

Lion is governed by the Agricultural Marketing Agreement Act of 1937, 7 U.S.C. §§ 601-627, and a federal marketing order, 7 C.F.R. §§ 989.1-989.801, that regulate the sale of raisins. See Lion Raisins Inc. v. U.S. Dep't of Agric., 354 F.3d 1072, 1076 (9th Cir.2004). The marketing order requires that raisin handlers, like Lion, have their products inspected by the USDA when they are received from producers and again before they are shipped to buyers. 7 C.F.R. §§ 989.58-989.59.

USDA inspectors assess the quality of raisins in various categories such as weight, color, and size. USDA inspectors then document their observations on "line check sheets" and assign grades to the raisins. In turn, information from the line check sheets is summarized on USDA inspection certificates that Lion can send to purchasers as an assurance of quality.

In the past, when Lion requested an inspection certificate with respect to certain raisins, the USDA grader would prepare a draft version of the certificate called a certificate "worksheet." The USDA grader prepared the worksheet based on inspection results previously recorded in the line check sheet. The USDA grader then gave the worksheet to Lion personnel. Based on information in the worksheet, Lion typed up the original inspection certificate and returned it and the worksheet to the USDA grader. The USDA grader then signed and returned the original certificate to Lion along with carbon copies (on blue tissue paper) of the certificate. Typically, the USDA would retain the worksheet and a copy (on blue tissue paper) of the certificate. (Trykowski Decl. ¶¶ 10-11.)

On February 20, 1998, the USDA's Agricultural Marketing Service ("AMS") received an anonymous tip that Lion was falsifying inspection certificates. After receiving the tip, G. Neil Blevins, then Chief Compliance Officer for the AMS, initiated an administrative investigation into Lion. At times, David Trykowski, then Senior Compliance Officer, and Maria Esguerra-Martinez assisted in the investigation. The investigative team reported that Lion had falsified three inspection certificates between 1997 and 1998. Based on this Blevins recommended a criminal investigation by the USDA Office of Inspector General ("OIG"). On May 27, 1999, the AMS Compliance Office forwarded to the OIG a request for a criminal investigation.

In October 2000, special agents with the USDA OIG executed a search warrant at Lion's place of business in Selma, California. The agents seized Lion's shipping records pertaining to export customers from approximately 1995 to October 2000. Ultimately, no criminal indictments or criminal charges were made against Lion. The USDA did, however, initiate three administrative enforcement proceedings against Lion.¹

B. Administrative Enforcement Proceedings

1. First Administrative Proceeding—I & G No. 01-0001

On January 12, 2001 the USDA filed the first administrative complaint (I & G No. 01-0001)² against Lion alleging that Lion, and its principal officers, agents and affiliates, falsified and misrepresented USDA certificates. The potential punishment for such misconduct includes being debarred from receiving benefits provided for under the Agricultural Marketing Agreement of 1946. The original administrative complaint alleged the falsification of the same three certificates discovered in the administrative investigation. The complaint was later amended to allege that Lion misrepresented USDA inspection results on three (3) forged certificates, one (1) altered certificate, and two (2) Lion documents that stated "Source of Sample: Officially Drawn" and "U.S. Grade."

Between January 28, 2002, and March 23, 2006, seventy-two days of hearings were held. Among other evidence, the USDA presented testimony of inspectors, Trykowski, and two former Lion employees. Colleen Carroll represented the USDA in the proceeding.³

After the close of evidence, Lion petitioned to reopen the hearing apparently on the ground that the USDA allegedly suppressed, altered and/or destroyed evidence. On May 4, 2009 (after the parties filed their initial summary judgment briefing in this case), the Administrative Law Judge ("ALJ") issued an initial decision adverse to Lion and also denied Lion's petition to reopen the hearing. Lion has not stated whether it will appeal.

2. Second Administrative Proceeding—I & G No. 03-0001

On October 11, 2002, the USDA filed a second administrative complaint (I & G No. 03-0001) against Lion alleging additional violations in connection with USDA certificates (allegedly Lion altered one additional certificate by changing the moisture content). Carroll represented the USDA. After various procedural steps and motions, in January 2008, the proceeding was finally scheduled for hearing. In March 2008, the USDA provided witness and exhibit lists to Lion, and in June 2008, the hearing began. Trykowski and Blevins testified as USDA witnesses.

The hearing was temporarily suspended while certified questions were submitted to the USDA Judicial Officer ("JO") concerning a legal dispute over the submission of exhibits. The hearing resumed, and on May 4, 2009, the ALJ issued an initial decision adverse to Lion. Lion has not stated whether it will appeal.

The ALJ decision of May 4, 2009, encompasses both of the administrative proceedings/complaints (I & G Nos. 01-0001 and 03-0001). According to the USDA, the ALJ found that Lion had falsified inspections results and ordered debarment. The debarment period is set to run concurrently with the five-year debarment period that was recently ordered as a result of the third and final administrative complaint discussed below.

3. Third Administrative Proceeding—I & G No. 04-0001

On November 20, 2003, the USDA filed a third administrative complaint against Lion (I & G No. 04-0001) alleging that Lion misrepresented inspection results. The ALJ dismissed a portion of the complaint on statute of limitations grounds. The remainder of the complaint alleged that Lion misrepresented inspection results on thirty-three (33) Lion "facsimile" certificates and altered the moisture percentage on one additional certificate. The hearing began on February 21, 2006, with Carroll representing the USDA once again. Trykowski and Blevins were USDA witnesses. The evidence closed on March 3, 2006.

In June 2006, the ALJ issued a decision and found that Lion had engaged in a pattern of misrepresentation, or deceptive or fraudulent practices in connection with the use of official inspection certificates and/or inspection results. The ALJ ordered debarment for five years. Lion appealed that decision on July 12, 2006. On April 17, 2009 (just a few weeks before Lion and the USDA filed their initial summary judgment briefing) the JO issued a decision and order which largely upheld the ALJ's disposition. The JO's order debarred Lion from receiving inspection services for five years.

C. Lion's FOIA requests

After the criminal investigation, and during the administrative enforcement proceedings, Lion submitted a number of FOIA requests to the USDA. Some of the FOIA requests precipitated earlier litigation and appeals to the Ninth Circuit. The FOIA requests that are the subject of this lawsuit, and that form the basis of the counts in Lion's complaint, are set forth below with the USDA's responses.

1. Count I—FOIA Request No. 97-07

On August 1, 2007, Lion submitted the following request to the USDA:

This is a request under the Freedom of Information Act for USDA/AMS policies and procedures for the storage, archiving, transferring, retrievability, access controls, retention, and disposal of records that were created from 1995 through 2000. Please include all revisions and amendments thereto, and any sections of the policy for defendants or respondents against whom the USDA filed a complaint.

(Doc. 43-8, Ex. 46.) The request was assigned FOIA No. 97-07. The USDA searched for records and on August 30, 2007, the USDA issued a written response (Doc. 43-8, Ex. 47), enclosing "two documents" responsive to the request. The two documents totaled 290 pages. The documents included the "USDA, AMS, FV, PPB File Code 175-B-20 Records Retention and Disposition instruction" with its "related Forms Retention Index and GRS handbook," and "AMS Directive 270.1." (Blazejak Decl. ¶ 8) (emphasis added.)

On October 11, 2007, Lion submitted a written appeal to the Administrator of the AMS (Doc. 43-8, Ex. 49). Lion appealed on the grounds that the "FOIA Officer released a disposition plan for F & V forms" but did not release disposition plans for the "FR...