Summary of a Recent
Judicial Development in
Perishable Agricultural Commodities Act

Bribery of USDA Inspector Results in Revocation of License

Walt McCarter
National AgLaw Center Research Associate

Summary of Decision

In B.T. Produce Co., Inc. v. Department of Agriculture, 296 Fed. App'x 78, 2008 WL 4570294 (D.C. Cir. 2008), the United States Court of Appeals for the District of Columbia Circuit affirmed a United States Department of Agriculture (USDA) determination that a produce company violated the Perishable Agricultural Commodities Act (PACA) by bribing a USDA inspector, and also affirmed the USDA's determination that the company's officers were responsibly connected to the company and subject to individual discipline.

Background

In 1999, the USDA uncovered widespread corruption in its produce inspection system at Hunts Point Terminal, a wholesale produce market in the Bronx. Id. at *1. An undercover USDA inspector used recording devices to document several bribes he received from a produce buyer for B.T. Produce. Id. The Agricultural Marketing Service of the USDA brought a complaint against B.T. Produce, alleging that the company failed, without reasonable cause, to perform a specification or duty, express or implied, arising out of an undertaking in connection with transactions involving perishable agricultural commodities purchased, received and accepted in interstate and foreign commerce, in violation of the PACA, 7 U.S.C. § 499b(4). Id. The administrative law judge concluded that B.T. Produce committed 42 willful and flagrant violations of § 499b(4) by paying bribes to the USDA inspector, and determined that the company's president and vice president were subject to individual discipline, but fined them $360,000 instead of revoking their PACA licenses. Id. Both parties appealed the ruling, and a judicial officer affirmed the decisions regarding B.T. Produce and its officers' liability but increased the sanction to the maximum of license revocation. Id. B.T. Produce appealed the determination that it violated the PACA and that the officers were responsibly connected to the company.

Arguments

B.T. Produce argued that it did not violate the PACA because the USDA may not interpret § 499b(4) to include a duty not to bribe a USDA inspector, that the implied duties clause of § 499b(4) applied only between parties to a contract, that the USDA was required to proceed under § 499n(b) and prove actual falsification of specific inspection certificates, and that the bribes were secretive and not in the scope of employment. Id. at *2.

Analysis and Holdings

The court simply stated that its decisions in Kleiman & Hochberg, Inc. v. USDA, 497 F.3d 681 (D.C.Cir.2007), and Coosemans Specialties, Inc. v. USDA, 482 F.3d 560 (D.C.Cir.2007), required them to reject all of B.T. Produce's arguments, and thus affirmed the USDA's decision. Id.

The case was decided on September 15, 2008.