Summary of a Recent
Judicial
Development in
Perishable Agricultural Commodities
Produce Broker Allowed to Bring PACA Claim Against Produce Dealer
Mengesha Tadesse SeyoumNational AgLaw Center Research Fellow
In Eastside Food Plaza, Inc. v. "R" Best Produce, Inc., No.03 Civ.106, 2003 WL 21727788 (S.D.N.Y.July 23, 2003), the United States District Court for the Southern District of New York held that a produce broker had standing to bring an action against a produce dealer for alleged violations of the unfair conduct provisions of the Perishable Agricultural Commodities Act ("PACA"), 7 U.S.C. §§ 499a-499t.
Talpa Sales, Inc. (Talpa), was a perishable agricultural commodities broker that was hired by "R" Best Produce, Inc. ("R" Best). See id. at *1. After "R" Best allegedly failed to make approximately $1,000,000.00 in payments to Talpa, Talpa brought action seeking to recover the amount it was allegedly owed. See id. at *2. Talpa later assigned all of its rights, title, and interest in the claims it asserted against "R" Best to Eastside Food Plaza, Inc (Eastside). See id.
Eastside filed an amended complaint against "R" Best that contained claims identical to the claims asserted by Talpa. See id. "R" Best responded by filing a motion to dismiss Eastside's complaint for lack of subject matter jurisdiction, arguing specifically that "PACA was enacted to protect unpaid sellers and suppliers of produce, and that because Talpa is merely an alleged unpaid broker of produce sales, . . . [Eastside] lacks standing to bring a claim under PACA," thereby divesting the court of jurisdiction. Id.
The court explained that PACA § 499b provides, in relevant part, that "'[i]t shall be unlawful . . . [f]or any commission merchant, dealer, or broker . . . to fail or refuse truly and correctly to account and make full payment promptly in respect of any transaction in any [perishable agricultural] commodity to the person with whom such transaction is had . . . .'" Id. at *4 (quoting 7 U.S.C. § 499b). The court stated that under PACA, a "person" includes "'individuals, partnerships, corporations, and associations'" and that Talpa, as a corporation, is therefore a "person" under PACA. Id. It also stated that
Limiting protection of the unfair conduct provision of PACA to sellers and buyers as the defendant suggests would directly contravene the plain meaning of the statutory language drafted and defined by the legislature. A broker who was engaged in transactions involving perishable agricultural commodities with a dealer and was not promptly paid in full may raise an unfair conduct claim under PACA. Therefore, this Court has jurisdiction over the claims asserted under PACA . . . .
Id. (citations omitted).
The case was decided on July 23, 2003; this summary was posted Jan. 27, 2004.