Spinale v. U.S. Dept. of Agriculture

• Court: U.S. District Court — Southern District of New York
• Writing for the Court: McMahon
• Citation: Spinale v. U.S. Dept. of Agriculture, 621 F.Supp.2d 112 (S.D. N.Y. 2009)
• Decision Date: 02 April 2009
• Docket Number: No. 08 Civ. 9324 (CM).,08 Civ. 9324 (CM).
• Parties: Anthony SPINALE, Chain Trucking Corp., Mr. Sprout, Inc., and Countrywide Produce, Plaintiffs, v. U.S. DEPARTMENT OF AGRICULTURE, Defendant.

621 F.Supp.2d 112

Anthony SPINALE, Chain Trucking Corp., Mr. Sprout, Inc., and Countrywide Produce, Plaintiffs, v. U.S. DEPARTMENT OF AGRICULTURE, Defendant.

No. 08 Civ. 9324 (CM).

United States District Court, S.D. New York.

April 2, 2009.

COPYRIGHT MATERIAL OMITTED

Linda Strumpf, Law Offices of Linda Strumpf, South Salem, NY, for Plaintiffs.

Carolina A. Fornos, U.S. Attorney's Office, New York, NY, for Defendant.

Order Granting Defendant's Motion to Dismiss Complaint

McMAHON, District Judge.

Plaintiffs Anthony Spinale ("Spinale"), Chain Trucking Corp., Mr. Sprout Inc., and Countrywide Produce (collectively, "Plaintiffs") bring this action against the United States Department of Agriculture ("USDA"), alleging defamation, deprivation of USDA inspection rights in violation of 42 U.S.C. § 1983, as well as retaliation for Spinale's exercise of his First Amendment rights. For the reasons below, Plaintiffs' claims are dismissed with prejudice.

Factual Background

A. The USDA Inspection Services

The Agricultural Marketing Act of 1946 (the "Act"), 7 U.S.C. § 1621 et seq., authorizes the inspection, certification, and identification as to class, quality, quantity and condition of agricultural products when shipped or received in interstate commerce, 7 U.S.C. § 1622(h)(1)(2009). The Act authorizes the Secretary of Agriculture to prescribe rules and regulations for these inspections, and the assessment and collection of fees "to cover the cost of the service rendered." Id. The stated purpose of this provision is so that "agricultural products may be marketed to the best advantage, that trading may be facilitated and that consumers may be able to obtain the quality product which they desire, except that no person shall be required to use the service authorized by this subsection." Id.

These inspection services are delegated to the Agricultural Marketing Service ("AMS"), which is a constituent agency of the USDA. 7 C.F.R. § 51.1(a). As the statute provides that "no person shall be required to use" the inspection service, 7 U.S.C. § 1622(h), the regulations provide that "[a]n application for inspection service may be made by any interested party," 7 C.F.R. § 51.5. Plaintiffs have requested this service. Compl. ¶¶ 14-15, 19(c), 21.

B. Denial and Withdrawal of Inspection Services

In addition to providing for inspection services, the rules and regulations also provide for the rejection of applications "when it appears that to perform the inspection and certification service would not be in the best interest of the Government." 7 C.F.R. § 51.9. Additionally, the regulations provide that the denial of inspection services may be denied to any person for "any interference with or obstruction of any inspector or official sampler in the performance of his duties, by intimidation, threat, assault or any other improper means." 7 C.F.R. § 51.46(c). The USDA has broad statutory discretion to determine when withdrawal of services is proper, and the regulations specifically provide that the USDA "may withdraw grading or inspection service from a person for correctable cause. The grading or inspection service withdrawn, after appropriate corrective action is taken, will be restored immediately, or as soon thereafter as a grader or inspector can be made available." 7 C.F.R. § 50.11(a).

C. The August 2, 2007 USDA Letter Withdrawing Inspection Services to Plaintiffs

On August 2, 2007, AMS issued a letter addressed to Spinale (the "USDA Letter"), informing him that it was withdrawing inspection services to Chain Trucking Corporation, Country Wide Produce, Inc., and Mr. Sprout, Inc., "to protect the interests of the Federal Government." Compl., Ex. A. The withdrawal was effective immediately and "for a period of such time as the circumstances causing withdrawal (i.e., intimidation and harassment of grading or inspection service employees) can be shown as corrected." Id. The USDA Letter expressly stated as follows:

Inspection services are being withdrawn because your actions at the companies specified in this letter interfere with the inspectors' ability to perform their job duties. You have allowed a dog to roam freely in the area where inspectors are performing their duties which interferes with the inspection services. In addition to the presence of the dog, the type of conduct includes, but is not limited to, you, your employees or your agents making derogatory comments to inspectors, throwing objects at inspectors, constant verbal comments that interfere with the inspector, and requests for inspectors to do actions outside their job duties. These actions constitute interference and obstruction of an inspection while performing their duties by intimidation, threat, assault or any other improper means.

Id. The USDA Letter also expressly set forth how Plaintiffs could have their inspection services restored:

In order to have inspection services restored, you must agree in writing that you, your employees and your agents will stop any conduct that interferes with the ability of the inspectors to perform their job duties. The conduct that must stop includes, but is not limited to: verbally abusing and making derogatory comments to inspectors; throwing objects at the inspectors; constantly asking inspector's questions that have nothing to do with the inspection taking place; allowing the dog in question on any of the premises where inspection services are provided; and any other provocative behavior towards the inspectors. In addition, you must not be present during any inspection and must prohibit company staff from interfering with inspectors.

Id.

Although the USDA Letter expressly stated that Plaintiffs could have their inspection services restored if they simply agreed in writing to stop such conduct, Plaintiffs claim that the statements in the USDA Letter are malicious, false, and defamatory, and that the withdrawal of inspection services was solely in response to numerous advertisements Spinale had published against the USDA, dating back to 2005. Plaintiffs further demanded that inspectors submit to polygraph testing.

Shortly after the USDA Letter, on or about August 31, 2007, Spinale filed suit in state court against several USDA inspectors alleging that USDA inspectors made false and malicious statements. That action was subsequently removed to this Court on October 10, 2007, it withdrawn on or about December 24, 2007, after Plaintiffs learned that the case could not proceed because they failed to exhaust administrative remedies under the Federal Tort Claims Act ("FTCA"). Having now exhausted their administrative remedies, Plaintiffs now renew their action.

On or about January 23, 2008, Plaintiffs filed an FTCA administrative claim for damages against the USDA, alleging that the USDA "negligently and knowingly violated 42 U.S.C. § 1983 against Plaintiffs, by depriving them of their right to USDA inspections and by wrongfully withdrawing inspection services" from Plaintiffs. Compl. ¶¶ 27-28. Plaintiffs further alleged that "the torts committed by the USDA resulted in injury to Plaintiffs in the sum of $584,800.00." Id. ¶ 29. As six months have passed since Plaintiffs filed their notice of claim, see 28 U.S.C. § 2675, Plaintiffs filed the present action against the USDA.

Discussion:

I. SUMMARY

All of Plaintiffs' claims are dismissed with prejudice.

First, the United States, and its agencies, have not waived sovereign immunity for intentional tort claims under the FTCA. Accordingly, Plaintiffs' defamation claim is dismissed for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure.

Second, Plaintiffs have not stated a claim for deprivation of inspection rights under 42 U.S.C. Section 1983, as that section is limited to persons acting under color of state law, and so does not apply to the USDA, a federal agency. To the extent Plaintiffs' Section 1983 claim is construed as a constitutional tort claim arising under Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971), sovereign immunity bars such claims against the United States, its agencies, and federal officers acting in their official capacities. Thus, Plaintiffs' Section 1983 claims is dismissed for failure to state a claim upon which relief can be granted, and any constitutional tort claims against the USDA for deprivation of inspection services is dismissed for lack of subject matter jurisdiction.

Third, Plaintiffs' allegations against the USDA for retaliation due to Spinale's exercise of his First Amendment rights are also dismissed for lack of subject matter jurisdiction as there is no waiver of sovereign immunity for constitutional tort claims against federal agencies.

II. PLAINTIFFS' DEFAMATION CLAIM AGAINST THE USDA IS DISMISSED FOR LACK OF SUBJECT MATTER JURISDICTION

A. Applicable Legal Standard for Rule 12(b)(1) Motion to Dismiss

On a motion to dismiss pursuant to Fed. R.Civ.P. 12(b)(1) for lack of subject matter jurisdiction, plaintiff carries the burden of establishing by a preponderance of the evidence that subject matter jurisdiction exists over his complaint. See Malik v. Meissner, 82 F.3d 560, 562 (2d Cir.1996) ("The burden of proving jurisdiction is on the party asserting it."); In re Joint E. & S. Dist. Asbestos Litig., 14 F.3d 726, 730 (2d Cir.1993) ("[Plaintiff], as the party asserting jurisdiction, bears the burden of showing that the case is properly before the court."); Beacon Enters. v. Menzies, 715 F.2d 757, 762 (2d Cir.1983) ("plaintiff ... bore the ultimate burden of proving the court's jurisdiction by a preponderance of the evidence"). In considering challenges to subject matter jurisdiction under Rule 12(b)(1), this Court may consider evidence extrinsic to the pleadings, such as affidavits, documents and testimony. See Kamen v. Am. Tel. & Tel. Co., 791 F.2d 1006, 1011 (2d Cir.1986).

B. The USDA Has Not Waived...