Vance v. Reed

• Decision Date: 02 September 1980
• Docket Number: No. 79-3272.,79-3272.
• Citation: 495 F. Supp. 852
• Parties: Dewey VANCE, d/b/a Dewey Vance Cattle Company v. Dewey REED, d/b/a Dewey Reed Livestock Dealer.
• Court: U.S. District Court — Middle District of Tennessee

495 F. Supp. 852

Dewey VANCE, d/b/a Dewey Vance Cattle Company v. Dewey REED, d/b/a Dewey Reed Livestock Dealer.

No. 79-3272.

United States District Court, M. D. Tennessee, Nashville Division.

September 2, 1980.

Henry Haile, Nashville, Tenn., for plaintiff.

Samuel Manly, Louisville, Ky., William L. Small, Nashville, Tenn., for defendant.

MEMORANDUM

WISEMAN, District Judge.

This case is before the Court on cross motions for summary judgment. Dewey Vance, a registered livestock dealer, filed a reparation complaint with the Packers and Stockyards administration of the United States Department of Agriculture on May 26, 1977, against defendant, Dewey Reed, also a registered dealer under the Packers and Stockyards Act. After completion of the administrative process, including thorough investigation, the judicial officer for the Office of the Secretary of Agriculture rendered a decision and order on February 26, 1979, ordering defendant, Dewey Reed, to pay to Dewey Vance the sum of $4,190.27 together with interest thereon at the rate of eight percent per annum from July 1, 1977. The Secretary held that defendant's failure to pay plaintiff the full purchase price was a violation of 7 U.S.C. § 208(a) (1976). Vance v. Reed, 38 Agric.Dec. 418 (1979). Reed has refused to comply. Plaintiff's motion for summary judgment is based simply on the Secretary's reparation order.

Defendant contends that a delay in shipping the cattle from Pulaski, Tennessee, to Amarillo, Texas, amounted to a material breach of contract between the parties for which he is entitled to an offset for damages in an amount equal to the amount left unpaid. Defendant further maintains that timely rescission of the contract entitles him to offset these damages. Defendant seeks summary judgment on the ground that this Court lacks jurisdiction over the subject matter of plaintiff's action.

Defendant's Motion for Summary Judgment

The gravamen of defendant's motion for summary judgment is that this Court lacks jurisdiction over the subject matter of this case because the Secretary of Agriculture had no statutory authority to decide the case. The determination of defendant's motion rests on the issue of the Secretary's authority because absent derivative jurisdiction via 7 U.S.C. § 210 this Court has no jurisdiction; although the parties are diverse, the amount in controversy does not exceed $10,000.

Defendant urges that plaintiff's allegation of one instance of failure to complete payment of purchase price for cattle was not an "unjust, unreasonable, or discriminatory regulation or practice" within the meaning of 7 U.S.C. § 208(a). The Secretary has decided similar cases for the past thirty years.¹ The courts, however, have not always agreed with the Secretary's assertion of jurisdiction.² Prior to 1976, the power of the Secretary to issue reparation orders in sales contract disputes was at best questionable.

In 1976, Congress amended the Packers and Stockyards Act to provide for prompt payment of the purchase price of livestock.³ The purpose of the 1976 amendments was to protect livestock producers from certain business practices engaged in by members of the packing industry. 1976 U.S. Code Cong. & Ad. News, 2267, 2271. To accomplish this purpose Congress strengthened the Secretary's authority to require bonds of packers, market agencies, and dealers so that the bankruptcy of packers would not damage livestock producers as it had in the previous decade. Id. at 2271-72. In addition, Congress enacted the prompt payment provisions to ensure that livestock producers were paid and paid promptly for the livestock tendered. See id. at 2268, 2270-72, 2273-74, 2277-78, 2283, 2285-86.⁴

After the 1976 amendments the Secretary's power is indisputable. Section (c) of 228b of title 7 of the United States Code makes failure to make prompt payment an unfair practice. Section (b) of 228b allows parties to agree in writing to payment terms different than those required by section (a) of 228b. Neither party has alleged the existence of a written contract and none was produced in the proceeding before the Secretary of Agriculture. Vance v. Reed, supra.⁵ Unfair practices are prohibited by Code section 192.⁶ Unjust practices are prohibited by section 208.⁷ By allegedly violating section 192 or section 208, defendant may be liable to "the person or persons injured" under section 209(a).⁸ Plaintiff sought a valid remedy before the Secretary. 7 U.S.C. § 209(b) (1976), by bringing this reparation proceeding under United States Code section 210(a).⁹ The Secretary's order is authorized by section 210(e) and plaintiff's suit for enforcement was validly brought before this Court under section 210(f).

Admittedly, neither the Secretary nor the parties before this Court relied on section 228b of the United States Code as the basis for finding an unfair practice. If not for section 228b, however, this Court would have difficulty upholding the jurisdiction of the Secretary.¹⁰ Facts alleged by plaintiff and upon which the Secretary based his decision appear to violate the plain terms of section 228b. Regardless of whether defendant violated section 228b or whether the Secretary's decision was based on 228b, by reading section 228b in pari materia with section 208 the Court holds that the intent of Congress was to make failure to make prompt payment of the full contract price — or complete failure to make full payment of the contract price — an unfair practice within the meaning of sections 192 and 208. Therefore, the Secretary had proper statutory authority to decide the case in the first instance and this Court has subject matter jurisdiction. Defendant's motion for summary judgment is denied.

Plaintiff's Motion for Summary Judgment

Plaintiff's motion for summary judgment is based solely on the Secretary's decision and order. Section 210(f) provides that a suit based on a reparation order "shall proceed in all respects like other civil suits for damages." 7 U.S.C. § 210(f) (1976). The statute further requires the "findings and orders of the Secretary to be prima facie evidence of the facts therein stated." Id. Defendant attacks the findings of the Secretary. Answer of Dewey Reed at 3.02. Even though the statute elevates the findings of the Secretary to the level of prima facie evidence, the decision and order is not res judicata and defendant can overcome the prima facie showing.

The exclusive method for review of reparation orders of the Secretary of Agriculture is to file in a United States District Court or a state court. 7 U.S.C. § 210(f) (1976); Maly Livestock Comm'n Co. v. Hardin, 446 F.2d 4 (8th Cir. 1971). Although the district court's scope of review under the Packers and Stockyards Act has not been definitively construed,¹¹ similar provisions in other statutes have been explained.

Under the Perishable Agricultural Commodities Act, appellant from a reparation order gets a trial de novo at which the prima facie case made out by the findings of the Secretary will prevail unless a preponderance of evidence is presented to defeat his conclusions. 7 U.S.C. § 499g(c) (1976) (the statute expressly provides for a trial de novo). See Spano v. Western Fruit Growers, Inc., 83 F.2d 150 (10th Cir. 1936); Consolidated Citrus Co. v. Goldstein, 214 F.Supp. 823 (D.Pa.1963); California Fruit Exchange v. Henry, 89 F.Supp. 580 (D.Pa.), aff'd 184 F.2d 517 (3d Cir. 1950). See also 47 U.S.C. § 407 (1976).

Prior to the 1978 revision, the Interstate Commerce Act had a provision almost identical to the statute before the Court.¹² In ICC v. Atlantic Coast Line Railroad Co., 383 U.S. 576, 86 S.Ct. 1000, 16 L.Ed.2d 109 (1966), the Supreme Court construed the provision and held that the Secretary's findings on issues other than primary jurisdiction issues "are subject to review under the prima facie evidence provision of § 16(2), with the statutory rights of introducing evidence not before the Commission and obtaining a jury determination of disputed issues of fact." Id. at 594, 86 S.Ct. at 1011, 16 L.Ed.2d at 122. The Court continued in a footnote

Section 16(2), of course, does not limit the carrier to introducing opposing evidence to rebut the prima facie effect of the Commission's order. It may also challenge the admissibility of the order on the grounds, for example, that the Commission did not afford the carrier a fair hearing or that the order was not based upon substantial evidence. But if a Commission order containing findings on all matters essential to the shipper's recovery is admitted and the carrier produces no opposing evidence, the findings and order of the Commission may not be rejected by the jury and the shipper is entitled to judgment.

Id. at 594 n.6, 86 S.Ct. at 1101 n.6, 16 L.Ed.2d at 122-23 n.6 (citations omitted).

The Supreme Court construction is helpful because the Interstate Commerce Act provision and the provision of the Packers and Stockyards Act are virtually identical. Its analysis is adopted by this Court for it is the only sensible reading of the "in all respects like other civil suits" clause. Therefore, under the standard announced by the Supreme Court in Atlantic Coast Line, this Court will hold a hearing on the disputed issues, and plaintiff's motion for summary judgment is denied.

1 See, e. g., Kent v. Duke, 38 Agric.Dec. 1199 (1979); Romrell v. Dredge, 35 Agric.Dec. 387 (1976); Young v. Miears, 34 Agric.Dec. 630 (1975); U. B. Livestock Co. v. Clark, 25 Agric. Dec. 595 (1966); Pack v. Rouse, 24 Agric.Dec. 587 (1965); Brunson v. Inland Empire Livestock Co., 23 Agric.Dec. 467 (1964); Alabama Livestock Market, Inc. v. Price & Co., 20 Agric. Dec. 228 (1961); Eastern Livestock Comm'n Co. v. Rudnick Livestock Sales Co., 9 Agric. Dec. 1085 (1950).

2 See Van Wyk v. Bergland, 570 F.2d 701 (8th Cir. 1978) (jurisdiction); Hays Livestock Comm'n Co. v. Maly Livestock Comm'n Co., 498 F.2d 925 (10th Cir. 1974) (jurisdiction); Branscome v. Schoneweis, 361 F.2d...