Summary of a Recent
Judicial Development in
Perishable Agricultural Commodities Act

Court Adopts Magistrate's Recommendation of Damages
and Attorney Fees under PACA

Walt McCarter
National AgLaw Center Research Associate

Summary of Decision

In Dayoub Marketing, Inc. v. Seven Seas Trading Co., No. 04 Civ 01881 (GBD)(HBP), 2009 WL 890034 (S.D.N.Y. Mar. 31, 2009), the United States District Court for the Southern District of New York held that there was no error in a magistrate's report setting damages in the amount of "the price of the goods accepted, less the payment already made," and awarding reasonable attorneys' fees under the Perishable Agricultural Commodities Act (PACA), and thus adopted the magistrate's recommendations.

Background

Dayoub Marketing, Inc. (Dayoub) sued the defendants for breach of contract arising from the defendants' failure to pay invoices for produce. Id. at *1. The court entered a default judgment against the defendants and referred the matter to a magistrate judge for an inquest on damages, then considered whether to accept, reject, or modify the magistrate's recommendations. Id. The magistrate had set the appropriate amount of damages, but had concluded that "since the record included insufficient evidence of the work performed by local counsel, Dayoub's request for attorneys' fees for the services provided by local counsel should be denied." Id. He had also set an appropriate amount of "reasonable" attorneys' fees for Dayoub's Illinois counsel. Id.

Analysis and Holdings

Under PACA, it is unlawful for any licensed produce dealer or commission merchant "to fail or refuse truly and correctly to account and make full payment promptly in respect of any transaction" in which a perishable agricultural commodity is contracted to be bought in interstate commerce. Id. at *11 (citing 7 U.S.C. § 499b(4)). The court adopted the magistrate's report and recommendations after finding that he had properly awarded damages to Dayoub in the amount of "the price of the goods accepted, less the payment already made," and had properly set a "reasonable" attorneys' fee award. Id. The magistrate had explained that the standard method for determining the amount of reasonable attorneys' fees is "the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate, or a presumptively reasonable fee." Id. at *17. Dayoub's Illinois counsel had submitted time records for themselves, but not for local counsel. Id. The magistrate noted that there was "scant information in the record concerning the nature of the legal work that local counsel performed, the attorneys who performed the work, the dates of that work, and the hours expended," and therefore denied the portion of Dayoub's application for services rendered by local counsel. Id. The magistrate also properly reduced the remainder of Dayoub's attorneys' fees to a "reasonable" amount, because Dayoub did not submit evidence to show that the hourly rates it sought were reasonable; for example, "[a]lthough Dayoub's fee application stated the rates at which Illinois counsel billed for time, it did not identify the specific attorneys who provided the services or describe the background and experience of those attorneys." Id. at *18.

The case was decided on March 31, 2009.