Summary of a Recent
Judicial Development in
Perishable Agricultural Commodities

Officer "Responsibly Connected" Under PACA

Amy K. Miller
National AgLaw Center Graduate Assistant

In Thames v. USDA, No. 06-11609, 2006 WL 2351839, at *1 (11th Cir. Aug. 15, 2006), the United States Court of Appeals for the Eleventh Circuit affirmed the final decision of the USDA determining that James E. Thames, Jr. was "responsibly connected" to a tomato re-packing company when it violated the Perishable Agricultural Commodities Act ("PACA"), 7 U.S.C. § 449b(4), thereby subjecting him to licensing and employment restrictions under PACA.

At the time of the PACA violations, Thames served as both vice president and a member of the board of directors and owned 16.2 percent of the outstanding stock. Id. at *1-*2. Under PACA, a rebuttable presumption arose that Thames was "responsibly connected" because he was affiliated with the violating company as an "officer, director, or holder of more than 10 per centum of the outstanding stock." Id. at *3 (quoting 7 U.S.C 499a(b)(9)).

To overcome the presumption, Thames argued that he was only a nominal officer and director who occupied his positions at the whim of the president because the company by-laws gave the president "the unqualified authority to elect and remove directors or corporate officers." Id. Nevertheless, in light of Thames extensive experience in the produce packing industry in general and his more than decade-long service as an officer and director for the violating company, the court concluded that Thames failed to demonstrate he was only a nominal director and officer at the plant. Id. at *4.

Because Thames did not use his knowledgeable oversight and governance powers to prevent the plant's PACA violations, the court found that he was "responsibly connected" to the company for purposes of licensing and employment restrictions. Id.

The case was decided on August 15, 2006; this summary was posted Nov. 27, 2006.