Summary of a Recent
Judicial
Development in
Perishable Agricultural Commodities
Deliveryman Not Considered a "Dealer" for
PACA Purposes
Craig RaysorNational AgLaw Center Graduate Assistant
In A&J Produce Corp. v.Chang, 385 F. Supp.2d. 354 (S.D.N.Y. 2005), a United States District Court granted summary judgment for a deliveryman by holding that the deliveryman that was "not engaged in the business" as a "dealer" and the seller did not provide adequate notice to the buyer of its intention to preserve the Perishable Agricultural Commodities Act ("PACA") trust.
The deliveryman delivered fresh fruit from a fruit wholesaler to multiple retailers in New York City, and in return, conveyed money for the fruit from the retailers to the wholesaler. Id. at 356. The deliveryman also provided an invoice, which did not state the wholesaler's name, with the fresh fruit to the retailers. See id. at 361. The wholesaler did not receive all the money that was due and owed to them for the fresh fruit delivered to the retailers, so the wholesaler brought suit and moved for a preliminary injunction against the deliveryman to require him to place in trust the amount of unpaid invoices according to PACA requirements. See id. at 356-57. The wholesaler amended its complaint to include the retailers, who blamed the deliveryman for failing to deliver the money. See id. at 357
The District Court held that a deliveryman who is not "engaged in the business of buying and selling in wholesale or jobbing quantities," but merely a conduit between buyer and seller, is not considered a "dealer" under PACA. See id. at 359-60. To preserve rights under the PACA trust, a seller must provide notice. See id. at 360. For notice to be proper, it must be "ordinary and usual," the payment period must be on the invoice if it differs from the default payment period, and there must be a statement of intent to preserve the trust as outlined in the statute. Id. The Court held that the retailers were not given "notice" that the wholesaler intended to preserve the trust because it is not "ordinary and usual" not to provide the name of the buyer of the perishable agriculture commodities. See id. at 362.
The case was decided on April 4, 2005; this summary was posted Feb. 7, 2006.