Fries Brothers v. Baker Produce, LLC et al

Filing 7

ORDER granting in part and denying in part 2 Motion for TRO. Signed by Chief Judge Susan J. Dlott. (wam1)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
FRIES BROTHERS, INC.
Plaintiff,
vs.
BAKER PRODUCE, LLC, et al.
Defendants.

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Chief Judge Dlott
Case No. 1:14cv00067
ORDER GRANTING IN PART
AND DENYING IN PART MOTION
FOR TEMPORARY RESTRAINING
ORDER

This matter is before the Court on Plaintiff’s Motion for Temporary Restraining Order
and for Preliminary Injunction (Doc. 2) (“TRO Motion”) and the attached Affidavit of Julia
McLachlan filed by Plaintiff Fries Brothers Inc. (“Fries”). The Court considered the TRO
Motion, the McLachlan Affidavit, and all related pleadings. Additionally, the Court held a
telephonic hearing on this matter on January 24, 2014, at which counsel for Plaintiff and the
individual Defendants, Ronald and Holly Baker, appearing pro se, were present.
Federal Rule of Civil Procedure 65 authorizes the Court to grant preliminary injunctive
relief including relief in the form of a temporary restraining order. A district court is to consider
the following four factors when deciding to issue such an order: (1) whether the movant has
demonstrated a strong likelihood of success on the merits; (2) whether the movant would
otherwise suffer irreparable injury; (3) whether issuance of preliminary injunctive relief would
cause substantial harm to others; and (4) whether the public interest would be served by issuance
of preliminary injunctive relief. See Leary v. Daeschner, 228 F.3d 729, 736 (6th Cir. 2000); see
also Mason Cnty. Med. Ass’n v. Knebel, 563 F.2d 256, 261 (6th Cir. 1977). “[T]he four
considerations applicable to preliminary injunctions are factors to be balanced and not
prerequisites that must be satisfied. . . . These factors simply guide the discretion of the court;
they are not meant to be rigid and unbending requirements.” In re Eagle-Pitcher Industries, Inc.,
963 F.2d 855, 859 (6th Cir. 1992) (citations omitted).

As to the likelihood of success on the merits, the McLachlan Affidavit demonstrates that
Defendants Baker Produce, LLC, by and through its principals Defendants Ronald Baker and
Holly A. Baker (collectively “Defendants’), purchased perishable agricultural commodities
(“Produce”) in interstate commerce and, thereafter, failed to pay Plaintiff in violation of the
Perishable Agricultural Commodities Act, 7 U.S.C. §§ 499a–499t, as amended (1984 & Supp.
1997) (the “PACA”).
These same pleadings and supporting documents establish that Defendants have either
dissipated the PACA trust or have presented a sufficient threat of dissipation of such trust to
warrant the relief granted in this Order. On the basis of the pleadings, it appears to this Court
that the Plaintiff will suffer immediate and irreparable injury due to the Defendants’ dissipation
of Plaintiff’s beneficial interest in the statutory trust created pursuant to 7 U.S.C. §§ 499e(c) and
that such dissipation will continue in the absence of injunctive relief.
The third and fourth factors for the Court to consider both support the issuance of
injunctive relief. Accordingly, The Court finds that a Temporary Restraining Order is warranted.
However, the Court finds that certain aspects of the relief requested by Plaintiff are
inappropriate at this stage, including Plaintiffs request for:
An Order directing Defendants to pay Plaintiff through counsel, or to deposit into
the Court registry the principal amount of $143,788.23, which represents monies
subject to the aforementioned statutory trust, including all receivables and monies
currently in the possession of Defendants from the sale of perishable agricultural
commodities or, if such funds cannot be deposited with the Court, in an interest
bearing escrow account with a federally insured financial institution.
(Doc. 2 at Page ID # 92.) A similar request was found to be inappropriate in Frio Ice, S.A., v.
Sunfruit, Inc., 918 F.2d 154, 165, 159 (11th Cir. 1990), a leading and often-followed case
involving claims for injunctive relief based on the PACA. In Frio Ice, the Eleventh Circuit held
that the plaintiff’s request for “only the segregation of sufficient funds to cover its own claims
against” the defendant should be denied on the basis that “[s]egregation of only part of the trust
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solely to accommodate a beneficiary’s singular interest is inappropriate because the statutory
trust exists for the benefit of all unpaid produce suppliers.” Id. at 159.
Based on the foregoing, the Court GRANTS IN PART and DENIES IN PART
Plaintiff’s Motion for Temporary Restraining Order.
IT IS HEREBY ORDERED:
1.

Defendants Ronald Baker and Holly A. Baker, individually, and Baker Produce

LLC (collectively, the “Defendants”), their respective agents, officers, assigns, and any of their
banking institutions are enjoined and restrained from dissipating, paying, transferring, assigning
or selling any and all assets covered by or subject to the trust provisions of the PACA until
further order of this Court. Under 7 U.S.C. § 499e(c)(2) of the PACA, the assets subject to this
order include all of the assets of Defendants unless DEFENDANTS can prove to this Court that a
particular asset is not derived from perishable agricultural commodities, inventories of food or
other products derived from perishable agricultural commodities or receivables or proceeds from
the sale of such commodities or products.
2.

Further, Defendants are ordered to escrow all proceeds from the sales of any and

all assets covered by or subject to the trust provisions of the PACA and to separate and maintain
these produce-related assets as the PACA trust for the benefit of all unpaid sellers having a bona
fide claim.
3.

Defendants also are ordered to produce to the Court and to the Plaintiff within

five (5) business days of this Order a current and detailed accounting and inventory of its
receivables and assets, including without limitation all accounts receivable, monies, bank
accounts, accounts payable, equipment, inventory and all other assets subject to the PACA trust
and the regulations promulgated thereunder.1

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See Frio Ice, 918 F.2d at 159 (citing 7 U.S.C. § 499(e)(c)(3)).

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4.

This Order will be binding upon the parties to this action, their officers, agents,

servants, employees, banks, or attorneys and all other persons or entities who receive actual
notice of this Order by personal service or otherwise. In this regard, the Defendants shall serve a
copy of this Order on all financial institutions which have filed a UCC security interest on
Defendants’ assets or with whom Defendants or any of them maintain a depository account or
who may be holding any assets for or on behalf of any of the Defendants.
5.

Because Defendants already possess $143,788.23 of PACA trust assets which are

the Plaintiff’s property, the bond in this matter is hereby set at $0.00.
6.

A Preliminary Injunction Hearing is hereby set for February 5, 2014 at 1:30 p.m.,

in Courtroom 7, Room 117, of the Potter Stewart U.S. Courthouse, 100 E. Fifth Street,
Cincinnati, Ohio 45202.
7.

Plaintiff shall serve a true and correct copy of this Order on all Defendants,

including their respective counsel should they retain counsel prior to the Preliminary Injunction
Hearing, by certified mail.
IT IS SO ORDERED.

S/Susan J. Dlott________________
Chief Judge Susan J. Dlott
United States District Court

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