Skyline Potato Company v. Rogers Brothers Farms, Inc.
Filing
44
ORDER denying 34 Plaintiff Skyline Potato Companys Motion for Summary Judgment by Judge William J. Martinez on 7/15/2011.(erv, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge William J. Martínez
Civil Action No. 10-cv-02353-WJM-KLM
SKYLINE POTATO COMPANY,
Plaintiff,
v.
ROGERS BROTHERS FARMS, INC.,
Defendant.
ORDER DENYING MOTION FOR SUMMARY JUDGMENT
Pursuant to 7 U.S.C. § 499g(c), Plaintiff Skyline Potato Company (“Skyline”)
brings this action seeking reversal of the Secretary of Agriculture’s (“Secretary”)
decision awarding Defendant Rogers Brothers Farms (“Rogers”) $216,302.41 as
reparations on a contract for the sale of potatoes.
Before the Court is Skyline’s Motion for Summary Judgment (the “Motion”)
asking the Court to find that Rogers has failed to meet its burden of establishing that
the Court has subject matter jurisdiction this dispute. Skyline contends that Rogers filed
its claim with the Secretary outside of the nine month jurisdictional window. (ECF No.
34.) For the reasons set forth below, the Court DENIES the Motion.
I. BACKGROUND INFORMATION
The following facts are not disputed for purposes of the instant Motion: Rogers
is a farm that produces potatoes and wheat. (ECF No. 43-1 at 5.) Rogers does not
pack and sell its own potatoes. (Id.) In 2005, Rogers grew a crop of “nugget” Russet
potatoes and placed them in a storage shed. (Id. at 5-6.)
Skyline is a licensee1 under the Perishable Agricultural Commodities Act
(“PACA”) that approached Rogers in October 2005 about packaging and selling its
“nugget” potato crop. (Id.) In July 2006, the parties entered into an oral contract2
whereby Skyline would package and sell Rogers’s 2005 potato harvest. Between July
10, 2006 and July 14, 2006, Skyline removed 37,489 sacks3 of potatoes from Rogers’s
shed. (Id. at 6.)
On August 24, 2006, Skyline provided Rogers with a partial accounting in “pack
out” form along with a check for $87,000. (Id.) On November 8, 2006, Skyline provided
a final accounting in “pack out” form with a check for $62,029.00. The total payment
from Skyline to Rogers for the entire crop was $149,029.00. (Id.)
Rogers filed an informal complaint with the Secretary on May 10, 2007. (ECF
No. 34-2.) Rogers alleged that Skyline had “agreed to purchase half of Rogers’ potato
1
Under the Perishable Agricultural Commodities Act, the Secretary of Agriculture
issues licenses to entities that do business in perishable commodities. See 7 U.S.C. § 499c-d.
Skyline holds a license issued by the Secretary of Agriculture. (ECF No. 34-1 at 5.)
2
The terms of the contract were disputed by the parties in the proceedings before the
Secretary and are also disputed in this action.
3
The parties use the terms “sack”, “hundredweight”, and “cwt” interchangeably. At oral
argument on the Motion, the parties explained that these phrases are all terms of art in the
industry that mean one hundred pounds of produce.
2
crop (18,587 sacks) for $9.00/sack and sell the other half of the crop for the benefit of
Rogers with a guaranteed minimum payment to Rogers of $10.00/sack.” (ECF No. 342 at 1.)
On July 10, 2007, Rogers submitted an invoice to Skyline for the potatoes. The
invoice was dated July 10, 2007 and sought payment for 18,587 sacks of potatoes sold
“over the scale” at $9.00/sack and 18,587 cwt of potatoes at $10.00/sack. (ECF No.
34-3.)
Rogers filed a formal complaint with the Secretary on October 9, 2007. (ECF
No. 34-4.) It alleged: “Rogers and Skyline entered into an oral agreement whereby
Skyline agreed to purchase half of Rogers’ potato crop (18,587 sacks) for $9.00/sack
and agreed to sell the other half of the crop for the benefit of Rogers with a guaranteed
minimum payment to Rogers of $10.00/sack.” (ECF No. 34-4 at 1.)
Skyline moved to dismiss the complaint as untimely but said motion was denied
by the Secretary. (ECF No. 37-1.) Skyline renewed its motion to dismiss at the hearing
before the Secretary. Following supplemental briefing, the Secretary again denied the
motion to dismiss. (ECF No. 37-2.) The Secretary issued a reparations decision on
August 26, 2010 awarding Rogers $ 216,302.41. (ECF No. 34-1.)
Skyline filed this action on September 24, 2010. (ECF No. 1.) The instant
Motion for Summary Judgment was filed on February 22, 2011 and the case is stayed
pending resolution of the instant Motion.
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II. STANDARD OF REVIEW
Plaintiff brought this action pursuant to 7 U.S.C. § 499g(c), which states, in
relevant part:
Appeal from reparation order; proceedings
Either party adversely affected by the entry of a reparation
order by the Secretary may, within thirty days from and after
the date of such order, appeal therefrom to the district court
of the United States.... Such suit in the district court shall be
a trial de novo and shall proceed in all respects like other
civil suits for damages, except that the findings of fact and
order or orders of the Secretary shall be prima-facie
evidence of the facts therein stated....
7 U.S.C.A. § 499g(c). All this essentially means, however, is that on a motion for
summary judgment in a PACA case, the “the Secretary’s findings are dispositive when
there is no evidence submitted in dispute. This interpretation gives effect to the prima
facie clause of the Act [PACA], by making the Secretary’s findings conclusive unless
effectively rebutted. Once rebutted, the Court is then able to reweigh the evidence, thus
giving effect to the provision for de novo review.” Frito-Lay, Inc. v. Willoughby, 863 F.2d
1029, 1033 (D.C. Cir. 1988). The prima facie validity given to the Secretary’s findings
essentially creates a burden of production, which the non-moving party may satisfy by
setting forth “specific facts showing that there is a genuine issue for trial.” Fed. R. Civ.
P. 56(e); Frito-Lay, Inc. v. Willoughby, 863 F.2d at 1032-33.
In an appeal from a reparations order, legal questions are reviewed de novo. 7
U.S.C.A. § 499g(c); Spano v. Western Fruit Growers, 83 F.2d 150, 152 (10th Cir. 1936)
(The Act “merely created a rebuttable presumption. It establishes a rule of evidence
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and does not prevent any defense. It does not interpose an obstacle to the
presentation of any contest on the issue nor does it take away the right of either party to
introduce any pertinent or relevant evidence.”); B.T. Produce Co, Inc. v. Robert A.
Johnson Sales, 354 F. Supp. 2d 284, 285 (S.D.N.Y. 2004) (noting that the district court
reviews issues de novo except for findings of fact made by the Secretary). Whether a
judicial body has jurisdiction over an action is a question of law. Plaza Speedway Inc.
v. U.S., 311 F.3d 1262, 1266 (10th Cir. 2002). Thus, the Court will defer to the factual
findings of the Secretary unless rebutted by new evidence and will review the
Secretary’s jurisdictional and other legal determinations de novo.
III. ANALYSIS
Though styled as a Motion for Summary Judgment, the parties agree that the
instant Motion is actually more akin to a motion to dismiss pursuant to Federal Rule of
Civil Procedure 12(b)(1) for lack of subject matter jurisdiction and the Court will analyze
it accordingly. Rule 12(b)(1) challenges are generally presented in one of two forms:
“[t]he moving party may (1) facially attack the complaint's allegations as to the existence
of subject matter jurisdiction, or (2) go beyond allegations contained in the complaint by
presenting evidence to challenge the factual basis upon which subject matter
jurisdiction rests.” Merrill Lynch Bus. Fin. Servs., Inc. v. Nudell, 363 F.3d 1072, 1074
(10th Cir. 2004) (quoting Maestas v. Lujan, 351 F.3d 1001, 1013 (10th Cir. 2003)).
When resolving a facial attack on the allegations of subject matter jurisdiction, the Court
“must accept the allegations in the complaint as true.” Holt v. United States, 46 F.3d
1000, 1002 (10th Cir. 1995). To the extent the defendant attacks the factual basis for
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subject matter jurisdiction, the Court “may not presume the truthfulness of the factual
allegations in the complaint, but may consider evidence to resolve disputed
jurisdictional facts.” SK Finance SA v. La Plata County, 126 F.3d 1272, 1275 (10th Cir.
1997). “Reference to evidence outside the pleadings does not convert the motion to
dismiss into a motion for summary judgment in such circumstances.” Id. Ultimately,
and in either case, the party bringing the claim has “[t]he burden of establishing subject
matter jurisdiction” because it is “the party asserting jurisdiction.” Port City Props. v.
Union Pac. R.R. Co., 518 F.3d 1186, 1189 (10th Cir. 2008).
Claims brought pursuant to PACA are “purely statutory creatures.” Costa Oro,
LLC v. Evergreen International, Inc., 2009 WL 765226, *3 (N.D. Ill. Mar. 23, 2009). The
statute of limitations for filing a reparation complaint is set forth in 7 U.S.C. § 499f(a)(1)
which states that such action may be brought “at any time within nine months after the
cause of action accrues.” The Secretary views the nine month limitations period as
jurisdictional. Bigger’s Brothers Inc. v. Produce Products, Inc., 42 Agric. Dec. 1673,
1675 (1983) (“When more than nine months elapses from the time of cause of action
accrues, this Department is powerless to take any action.”).
As the party seeking relief, Rogers bears the burden of establishing that its claim
was timely filed with the Secretary, thereby establishing subject matter jurisdiction for
both the Secretary and the Court. To meet this burden, Rogers must show that its
informal complaint was filed with the Secretary within nine months of the time its cause
of action accrued.
In a PACA action, “[t]he general rule is that a cause of action accrues when the
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right to institute and maintain a suit arises, and not before.” George Wuszke v. Fruit
Pak, Inc., 42 Agric. Dec. 1207, 1211 (1983) (citing Boler Fruit & Veg. Co. v. Kenworthy,
19 Agric Dec. 226 (1960)). Because the dispute in this case involves whether the
amount paid for the potatoes was appropriate, Rogers’s cause of action accrued when
payment was due.
The applicable regulations includes eleven different provisions governing the
timing of payment under PACA. See 7 C.F.R. § 46.2(aa)(1)-(11). When payment is
due is dependent on the relationship between the parties. For purposes of this action,
the only two relevant provisions are that associated with a grower/buyer relationship
and that associated with a grower/growers’ agent relationship. For “produce purchased
by a buyer”, payment is due “within 10 days after the day on which the produce is
accepted”. 7 C.F.R. § 46.2(aa)(5). “Whenever a grower’s agent or shipper harvests,
packs, or distributes entire crops or multiple lots therefrom for or on behalf of others,
payment for the initial shipment shall be made within 30 days after receipt of the goods
for sale or within 5 days after the date the agent receives payment for the goods,
whichever comes first.” 7 C.F.R. § 46.2(aa)(9).
The parties agree that, for purposes of the instant Motion, the key determination
is whether Skyline was acting as a growers’ agent or was instead a straight-up buyer in
its transaction with Rogers. If Skyline was a buyer, then payment was due 10 days
after shipment, meaning that Rogers’s cause of action accrued on July 24, 2006 and its
filing of the informal complaint on May 10, 2007 was untimely. But if Skyline was a
growers’ agent, as the Secretary found, payment was due—and Rogers Brothers’s
cause of action accrued—on August 14, 2006 and, based on this accrual date, Roger’s
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informal complaint was timely.
The regulations promulgated pursuant to PACA define a “growers’ agent” as
“any person operating at shipping point who sells or distributes produce in commerce
for or on behalf of growers or others and whose operations may include the planting,
harvesting, grading, packing, and furnishing containers, supplies, or other services.” 7
C.F.R. § 46.2(q). The regulations also provide a description of the duties of “growers’
agents”:
Growers’ agents sell and distribute produce for or on behalf
of growers and others and, in addition, may perform a wide
variety of services, such as financing, planting, harvesting,
grading, packing, furnishing labor, seed, containers, and
other supplies or services. They usually distribute the
produce in their own names and collect payment direct from
the consignees. They render accountings to their principals,
paying the net proceeds after deducting their expenses and
fees.
7 C.F.R. § 46.30(b).
In the instant Motion, Skyline challenges the Secretary’s finding that Skyline was
a “growers’ agent” with respect to the first part of the contract, i.e. Skyline’s purchase of
the first half of the potato crop for $9.00/sack.4 Skyline argues that Rogers admitted in
its pleadings that Skyline was a straight-up “buyer” with respect to the first half of the
contract rather than a “growers’ agent” and that Rogers is bound to this admission.
(ECF No. 34 at 19; ECF No. 38 at 2.) In the alternative, Skyline argues that the
4
For purposes of the instant Motion, Skyline does not dispute the Secretary’s finding
that it was a growers’ agent with respect to the second part of the crop/contract. In the case
overall, however, Skyline contends that there was no bifurcated contract. Skyline contends that
the parties entered into an oral contract whereby it would market and sell Rogers’s entire crop
of potatoes with no promised minimum payment. (ECF No. 1 ¶¶ 21-24.)
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evidence shows it was not a growers’ agent with respect to the first half of the crop.
The Court will examine each argument in turn below.
A.
Whether the Parties’ Relationship is Determined by Judicial Admission
Though not described as such by Plaintiff, Skyline is essentially arguing that
Rogers is bound by its judicial admissions in the complaint filed before the Secretary,
and that its binding judicial admissions conclusively establish that its complaint with the
Secretary was untimely. In this case, Rogers’s sworn complaint filed with the Secretary
stated: “Rogers and Skyline entered into an oral agreement whereby Skyline agreed to
purchase half of Rogers’ potato crop (18,587 sacks) for $9.00/sack and agreed to sell
the other half of the crop for the benefit of Rogers with a guaranteed minimum payment
to Rogers of $10.00/sack.” (ECF No. 34-4 at 2.) Pursuant to 7 U.S.C. § 499g(c), once
the Secretary’s decision is appealed to the district court, the pleadings certified by and
relied upon by the Secretary become the pleadings in this action. Thus, Rogers’s
formal complaint filed with the Secretary serves as the Complaint in this case.
“Judicial admissions are formal admissions which have the effect of withdrawing
a fact from issue and dispensing wholly with the need for proof of the fact.” Guidry v.
Sheet Metal Workers Intern. Ass’n, Local 9, 10 F.3d 700, 716 (10th Cir. 1993). The
Seventh Circuit has explained judicial admissions in these terms:
Judicial admissions are formal concessions in the pleadings,
or stipulations by a party or its counsel, that are binding
upon the party making them. They may not be controverted
at trial or on appeal. Indeed, they are “not evidence at all but
rather have the effect of withdrawing a fact from contention.”
Michael H. Graham, Federal Practice and Procedure:
Evidence § 6726 (Interim Edition); see also John William
Strong, McCormick on Evidence § 254, at 142 (1992). A
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judicial admission is conclusive, unless the court allows it to
be withdrawn; ordinary evidentiary admissions, in contrast,
my be controverted or explained by the party. Id. When a
party testifying at trial or during a deposition admits a fact
which is adverse to his claim or defense, it is generally
preferable to treat that testimony as solely an evidentiary
admission. Michael H. Graham, Federal Practice and
Procedure § 6726, at 536–37.
Keller v. United States, 58 F.3d 1194, 1198 n. 8 (7th Cir. 1995). Judicial admissions
must be “deliberate and clear.” Commercial Money Ctr., Inc. v. Ill. Union Ins. Co., 508
F.3d 327, 336 (6th Cir. 2007).
A statement or assertion of fact in a complaint or other pleading may serve as a
judicial admission. Sicor Ltd. v. Cetus Corp., 51 F.3d 848, 859 (9th Cir. 1995); Schott
Motorcycle Supply v. American Honda Motor Co., 976 F.2d 58, 61 (1st Cir. 1992).
Courts, however, will not construe assertions as judicial admissions where inconsistent
facts are alleged as part of alternative or hypothetical pleadings in the same case.
Schott Motorcycle Supply, 976 F.2d at 61; Garman v. Griffin, 666 F.2d 1156, 1159 (8th
Cir. 1981). Such a rule is consistent with the liberal pleading policies embodied in Rule
8 of Federal Rules of Civil Procedure. McCalden v. California Library Ass’n, 955 F.2d
1214, 1219 (9th Cir. 1990); Garman, 666 F.2d at 1159–60.
Skyline argues that Rogers’s statement in its Complaint that “Skyline agreed to
purchase half of Rogers’ potato crop (18,587 sacks) for $9.00/sack” is a judicial
admission showing that it was a buyer with respect to the first half of the crop rather
than a growers’ agent. However, the Court believes that Skyline is attempting to read
too much into this statement. The statement alleges that Skyline bought potatoes from
Rogers for a certain price and that is the extent of the statement. It contains no details
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about the handling and packaging of the potatoes, the timing of payment, or any other
factors that tend to show whether the relationship between the parties is one of
buyer/seller or grower/growers’ agent. The mere fact that the parties agreed on a
specific price for a certain portion of a grower’s crop, without more, does not establish
the nature of the parties’ relationship. See Dominc Schulist v. Wysocki Sales, Inc., 46
Agric. Dec. 694, 699-700 (1987).
A judicial admission must be deliberate, clear, and unequivocal. Matter of
Corland Corp., 967 F.2d 1069, 1074 (5th Cir. 1992). Rogers’s statement in the
Complaint is a clear statement of the pricing scheme agreed to by the parties, but it is
not a clear and unequivocal statement of the parties’ overall relationship. Were the
Court to accept Rogers’s statement as a judicial admission with respect to the parties’
relationship, it would have to ignore the evidence respecting the other factors relevant
to whether a growers’ agent relationship existed (e.g., type and timing of invoices,
packaging and handling of crop). The law does not permit the Court to do this. Thus,
the Court finds that the allegations in Rogers’s Complaint do not conclusively establish
that its relationship with Skyline was that of grower/buyer with respect to the first half of
its potato crop rather than grower/growers’ agent.
B.
Nature of the Relationship Between the Parties
Because there is no binding admission on the part of Defendant with respect to
the parties’ relationship, the Court must examine the evidence to determine whether
Rogers has shown that its informal complaint with Secretary was timely. As the
complaining party, Rogers bears the burden of establishing the Court’s subject matter
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jurisdiction by a preponderance of the evidence. U.S. ex rel. Hafter v. Spectrum
Emergency Care, Inc., 190 F.3d 1156, 1160 n.5 (10th Cir. 1999). Therefore, Rogers
must show that its cause of action accrued within the nine month jurisdictional time
limit.
Rogers argues that its claim was timely because Skyline was acting as a
growers’ agent with respect to the entire crop of potatoes. Skyline contends that it was
not a growers’ agent with respect to the first half of the crop.5
The absence of a written agreement in this case makes determining the
relationship between the parties difficult. However, it is undisputed that Rogers only
planted and harvested potatoes; they did not grade, pack, or deliver the potatoes for
resale. The evidence is uncontroverted that Skyline performed these functions for
Rogers with respect to the entire crop and did not differentiate between the first half of
the shed and the second half. It is also undisputed that Rogers did not invoice Skyline
for the potatoes within the time period that would be expected in a grower/buyer
relationship.6 Rather, Skyline provided Rogers with two invoices—one preliminary and
one final—that were in the nature of “pack out” invoices.
In Dominic Schulist v. Wysocki Sales, Inc., 46 Agric. Dec. 694 (1987), the grower
5
As previously noted, Skyline disputes the existence of a two-part contract and, in the
case overall, alleges that there was an oral agreement to act as a buyer’s agent with no
minimum payment promised. (Compl. ¶¶ 22-24.)
6
Rogers eventually sent an invoice to Skyline but it was not until nearly a year later,
after it had filed an informal complaint with the Secretary. Rogers contends, and Skyline does
not dispute, that it only submitted the invoice on advice of counsel for purposes of pursuing its
claim with the Secretary. Because this invoice was so remote to the transaction and was
provided only on the advice of counsel for the purposes of litigation, it is not compelling
evidence of the parties’ understanding and intent with respect to the nature of their relationship.
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sold 20 pound bags of potatoes to the buyer on two different occasions at a rate of
$4.50/sack. After much of the crop was discovered to be rotten, the buyer “dumped”
much of the produce and paid the grower for only a portion of the crop. The parties
disputed the nature of their relationship—the grower contended that their transactions
were a straight sale and the buyer argued that it was acting as a growers’ agent. In
proceedings before the Secretary, the buyer produced invoices containing a provision
titled “GROWERS AGENT CONTRACT AND PICKUP TICKET”. Rather than deferring
to the titles assigned themselves by the parties, the Secretary looked at the timing and
nature of the invoices and found that “no amount of contract verbiage describing a
growers’ agent relationship can overcome what actually happened in this case.” Id. at
700. The Secretary stated “while the document appears to describe a growers’ agent
relationship, the actual relationship as it existed between complainant and respondent
does not fit into that category as described in the regulations.” Id. at 699. The
Secretary found that the buyer was not acting as a growers’ agent with respect to the
potatoes but had purchased them straight up from the grower.
In Lozano v. Whizpac, 46 Agric. Dec. 658 (1987), the Secretary held that a
purchaser who was required under a contract to “pack, sell, and ship” tomatoes was a
growers’ agent. The basis for this holding was, in part, the fact that the purchaser had
provided invoice to the farmer rather than the other way around, and that these invoices
were “pack out” invoices.
In this case, the Secretary found that the first part of the transaction was not a
pure sale triggering a 10 day payment because “the agreement of the parties was never
for a specified quantity of potatoes at a specified price. . . ‘Half’ is not a definite
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quantity. The number of sacks involved was not a part of the initial agreement,
because the number of sacks was not known before the potatoes were removed from
[Rogers’s] shed, hauled to [Skyline]’s facility, sorted, and put into sacks.” (ECF No. 372 at 6-7.) The Secretary also found that the timing and the nature of the invoices
demonstrated a growers’ agent relationship in that Rogers did not immediately demand
payment for the first half of the crop. Rather, Skyline waited until Rogers’s potatoes
had been resold and then sent a “pack out” invoice showing the net return on each
batch of potatoes. (Id. at 6.) The Secretary stated: “The significant fact is that the
entire crop, or bin, or ‘shed-full’, of [Rogers’s] potatoes, that [Skyline] received and
handled, were in fact handled on a ‘pack-out’ basis, as described by [Skyline’s] field
representative.” (Id. at 7.)
The Court agrees with the Secretary’s analysis. As alleged by Rogers and
admitted for the purpose of this Motion by Skyline, the parties’ contract did not specify
the amount of potatoes that Skyline was buying from Roger’s Brothers (e.g., 10,000 lbs
at $9.00/lb). Instead, the contract provided that the rate of payment would be different
for each half of the shed of potatoes. Neither party knew how much constituted a “half”,
even after the potatoes were weighed in the trucks, because neither party knew how
much of the crop was viable until Skyline sorted the potatoes, removed the culls, and
packaged them for resale. Thus, the Court finds that Skyline was acting on behalf of
Rogers Brothers when it sorted, packaged, and delivered for sale the entire shed of
potatoes. The Court further finds that the parties had a single, consistent
relationship—that of grower/growers’ agent—with respect to the entire contract.
Because Skyline was acting as a growers’ agent as to the entire contract, Rogers has
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met its burden of showing by preponderance of the evidence that its informal complaint
was timely filed with the Secretary.
IV. CONCLUSION
For the reasons set forth above, Plaintiff Skyline Potato Company’s Motion for
Summary Judgment is DENIED.
Dated this 15th day of July, 2011.
BY THE COURT:
William J. Martínez
United States District Judge
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