U.S. v. Haun

• Decision Date: 26 August 1997
• Docket Number: No. 96-5505,96-5505
• Citation: 124 F.3d 745
• Parties: UNITED STATES Of America, Plaintiff-Appellant, v. Joey HAUN, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 745

124 F.3d 745

UNITED STATES Of America, Plaintiff-Appellant, v. Joey HAUN, Defendant-Appellee.

No. 96-5505.

United States Court of Appeals, Sixth Circuit.

Argued and Submitted May 1, 1997.

Decided Aug. 26, 1997.

Barbara C. Biddle, Edward Himmelfarb (argued and briefed), U.S. Department of Justice, Civil Division, Appellate Staff, Washington, DC, for Plaintiff-Appellant.

Elizabeth E. Agar (briefed), Croswell & Adams, Cincinnati, OH, Danny Hryhorchuk (briefed), Morristown, TN, for Defendant-Appellee.

Before: WELLFORD, MOORE, and COLE, Circuit Judges.

OPINION

MOORE, Circuit Judge.

The government filed a civil action in the United States District Court for the Eastern District of Tennessee against Joey Haun under the Packers and Stockyards Act of 1921, 7 U.S.C. §§ 181-229 (the Act), to collect a civil penalty and to enjoin Haun from carrying on the business of a livestock dealer without having registered with the Secretary of Agriculture and filed the requisite bond. The district court declined to accept jurisdiction over the case, declaring that the action was "better handled administratively." As we read the plain language of the controlling statute, § 303 of the Act (7 U.S.C. § 203), a civil action in a United States district court is the appropriate and exclusive avenue for recovery of the prescribed penalty. Because referral of such an action to the Secretary would be improper, and because we see no other basis for the district court in this case to have declined to exercise jurisdiction, we reverse.

I. FACTS AND PROCEDURAL HISTORY

Joey Haun is a Tennessee farmer who admits to making incidental purchases and sales of livestock and to transporting livestock to and from markets for his friends and neighbors. Joint Appendix (J.A.) at 11-12 (Answer p 3). The government alleges that, from July 3, 1993 through October 13, 1993, Haun bought and sold livestock as a dealer without registering with the Secretary of Agriculture and without furnishing a bond as required by the Packers and Stockyards Act. J.A. at 6 (Compl.p 5).

In the fall of 1992, the government sent a letter to Haun requesting that he comply with the Act, enclosing an application for registration and a bond form. Haun did not respond. The government then sent a certified letter, which was later returned unclaimed, explaining the penalties for violations of the Act and again requesting that Haun comply. In the summer of 1993, the government hand-delivered another letter to Haun's mother at Haun's residence, but Haun did not respond. J.A. at 6-7 (Compl.pp 5-8).

Believing that Haun had violated the Act, the government filed a complaint in United States district court requesting a civil penalty pursuant to 7 U.S.C. § 203 in the amount of $2,575 ($500 for the first day of violation plus $25 per day for violations thereafter), and a permanent injunction pursuant to 7 U.S.C. §§ 204 and 216 prohibiting Haun from engaging in activities covered under the Act without first registering and furnishing a bond. J.A. at 7-8.

On the eve of trial, the district court ordered the government to show cause why the case should not be dismissed for lack of jurisdiction, explaining that in the court's view the matter "should have been brought before a Judicial Officer of the United States Department of Agriculture, rather than in a district court." J.A. at 13-14 (citing 7 C.F.R. pt. 1, subpt. H, § 1.131). In response, the government argued that the cited regulation does not encompass § 303 of the Act (7 U.S.C. § 203), ¹ and that a suit in a district court is the only way to recover a civil penalty under § 303. The government provided the court with citations to other actions that had been brought in federal district courts pursuant to § 303. ² Notwithstanding the government's assertions, the district court subsequently declined to accept jurisdiction over the matter and dismissed the case, declaring:

It does appear that some of these cases have been initiated in federal courts.... However, the vast majority of cases under Section 303 of the Packers and Stockyards Act [7 U.S.C. § 203] are reported in the Decisions of the United States Department of Agriculture. In the Court's judgment, even if it is appropriate to bring these cases to district court, they are better handled administratively.

J.A. at 16.

Before us, the government protests that a civil penalty under § 303 of the Act cannot be assessed administratively; thus, the district court's order leaves the Department of Agriculture in a state of "legal limbo" with respect to penalizing Haun, or others like him, for operating as a livestock dealer without first registering. The question we must decide is whether the district court erred in declining to exercise jurisdiction.

II. DISCUSSION

A. Appellate Jurisdiction and Standard of Review

We have jurisdiction to review the district court's order dismissing the complaint pursuant to 28 U.S.C. § 1291. See In re Long Distance Telecommunications Litigation, 831 F.2d 627, 632 (6th Cir.1987) (addressing propriety of district court's dismissal of claims within the primary jurisdiction of the FCC).

The parties disagree, however, as to the standard we should apply in reviewing the district court's peculiar dismissal: the government calls for de novo review because the case involves purely legal issues; Haun contends that a court's decision to defer jurisdiction pending administrative proceedings is reviewed for abuse of discretion. In our view, this case presents a question of statutory interpretation, ascertaining whether a provision of the Packers and Stockyards Act confers district court jurisdiction exclusive of the agency; accordingly, our review is de novo. See Holmes Fin. Assocs. v. Resolution Trust Corp., 33 F.3d 561, 563 (6th Cir.1994) ("Because the issue of exclusive federal jurisdiction is a matter of statutory interpretation, our review is de novo.").

B. Structure of the Packers and Stockyards Act

The Packers and Stockyards Act of 1921 was designed to secure the free and unburdened flow of livestock across the nation from producers to consumers by regulating the business of stockyards and their participants. See Stafford v. Wallace, 258 U.S. 495, 514, 42 S.Ct. 397, 401, 66 L.Ed. 735 (1922). Motivated in part by concern over exorbitant charges, duplicate commissions, and deceptive pricing practices, "all made possible by collusion between the stockyards management and the commission men, on the one hand, and the packers and dealers on the other," Congress established a pervasive regulatory scheme to be administered by the Secretary of Agriculture. Id. at 515, 42 S.Ct. at 401; see 7 U.S.C. § 228(a). In recognition of the Act's remedial nature, courts have construed its provisions liberally to effectuate its purposes. Farrow v. United States Dep't of Agric., 760 F.2d 211, 214 (8th Cir.1985). One such purpose is "to assure fair competition and fair trade practices in livestock marketing and in the meatpacking industry." H.R.REP. NO. 1048 (1957), reprinted in 1958 U.S.C.C.A.N. 5212, 5213.

Under the Act, a person who buys or sells livestock in commerce on his or her own account or for another person is a dealer, unless the person charges a commission, in which case he or she is a market agency. See 7 U.S.C. § 201(d) (defining a "dealer" as "any person, not a market agency, engaged in the business of buying or selling in commerce livestock, either on his own account or as the employee or agent of the vendor or purchaser"); 7 U.S.C. § 201(c) (defining "market agency" as "any person engaged in the business of (1) buying or selling in commerce livestock on a commission basis or (2) furnishing stockyard services").

A person aspiring to carry on the business of a livestock dealer or market agency has certain obligations under the Act. Section 303 of the Act, in conjunction with applicable regulations, requires each person operating as a dealer or market agency at regulated or unregulated stockyards to register with the Secretary of Agriculture. 7 U.S.C. § 203; see 9 C.F.R. § 201.10(a) (requiring every person operating or desiring to operate as a dealer or market agency to apply for registration by filing a properly executed application for registration and furnishing a bond). Anyone who violates the registration provision "shall be liable to a penalty of not more than $500 for each such offense and not more than $25 for each day it continues, which shall accrue to the United States and may be recovered in a civil action brought by the United States." 7 U.S.C. § 203. ³ In accordance with U.S.D.A. regulations, dealers and market agencies must also post a reasonable bond to secure their financial obligations. 7 U.S.C. § 204; see 9 C.F.R. § 201.29(a), (b) (requiring every dealer or market agency to execute and maintain a reasonable bond; prohibiting any dealer or market agency from operating without having on file and in effect a bond in compliance with regulations).

Section § 312(a) of the Act makes it unlawful for any dealer or market agency "to engage in or use any unfair, unjustly discriminatory, or deceptive practice or device" in connection with the basic functions of buying and selling livestock. 7 U.S.C. § 213(a). If the Secretary has reason to believe that any dealer or market agency is engaging in the proscribed behavior, after notice and a full hearing the Secretary may issue a cease and desist order and/or assess under statutorily- prescribed criteria a civil penalty of up to $10,000 for each violation. 7 U.S.C. § 213(b).

Under the Act's basic enforcement scheme, the Secretary may inquire independently into abuses of the Act relating to stockyard services, and make and enforce any order "except orders for the payment of money." 7 U.S.C. § 210(c). If, after appropriate process, the Secretary finds any registrant insolvent or in violation of any provisions of the Act, the Secretary may suspend the registrant for a reasonable specified period...