B & D Produce Sales, LLC v. Packman1, Inc.

Filing 18

MEMORANDUM OPINION AND ORDER signed by Judge Xavier Rodriguez. Defendant Packman1, Inc.'s Motion to Stay Proceedings (docket no. 9) is GRANTED. Accordingly, the Court ORDERS that this case is hereby STAYED. The parties are hereby ORDERED to fil e quarterly status reports with this Court about the progress of the proceedings before the Secretary of Agriculture, beginning November 18, 2016.The Clerk's office is DIRECTED to administratively close this case pending further order of the Court. (mr)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
B & D PRODUCE SALES, LLC,
Plaintiff,
v.
PACKMAN1, INC.,
Defendant.

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Civil Action No. SA-16-CV-99-XR

ORDER
Before this Court is Defendant Packman1, Inc.’s Motion to Stay Proceedings. Docket no.
9. After careful consideration, the court will grant the motion.
BACKGROUND
Plaintiff B & D Produce Sales, LLC (“B & D”) entered into an agreement to purchase
watermelons from Defendant Packman1, Inc. (“Packman”) in June 2015. Docket no. 1 at 2. B
& D alleges that some of the watermelons provided by Packman were defective. Id. As a result
of these alleged defects, a dispute arose between the two produce companies about the amount of
payment submitted to Packman and the amount still owed to Packman. Id. at 3.
Both companies are merchants licensed by the U.S. Department of Agriculture and
subject to the Perishable Agricultural Commodities Act of 1930 (“PACA”). Id. at 2; see also
docket no. 9 at 1. PACA requires produce companies to render “full payment promptly” for any
produce purchased. 7 U.S.C. § 499b(4) (2012). The statute also delegates authority to the
Secretary of Agriculture to hear disputes relating to violations of PACA. Id. § 499e. An

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aggrieved party may either file a complaint to the Secretary of Agriculture or proceed with a
complaint in either state or federal court. Id. § 499e(b). An injured party who chooses to
proceed through the administrative process must first file an informal complaint with the Deputy
Administrator, who will investigate the alleged violation and attempt to facilitate a resolution. 7
C.F.R. § 47.3(b)(2). If the injured party is unhappy with this outcome, it then proceeds by filing
a formal complaint with the Secretary of Agriculture. 7 C.F.R. § 47.6(a)(1).
Packman filed an informal complaint on January 5, 2016. Docket no. 9 at 2. B & D did
not file a response, but instead filed suit here on January 28, 2016. Docket no. 1. Packman
proceeded to move to the second stage of the administrative process and file a formal complaint
with the Secretary of Agriculture on April 11, 2016. Docket no. 15 at 2. The case before the
Secretary is still ongoing.
Packman filed its Motion to Stay Proceedings on April 8, 2016. Docket no. 9. It seeks to
stay the proceedings in this Court pending the outcome of the administrative action. Id. The
parties subsequently advised the Court that they were engaged in settlement negotiations and
requested several extensions to file further briefing on the motion. Docket nos. 10, 11, 12, 13.
At some point in time, settlement discussions broke down. B & D filed its Response on June 20,
2016, and Packman filed its Reply on July 6, 2016. Docket nos. 16, 17.
DISCUSSION
A district court has the inherent power to stay proceedings. Clinton v. Jones, 520 U.S.
681, 706 (1997). To determine if a stay is proper, the Court considers three factors: (1) any
potential prejudice to the non-moving party; (2) the hardship and inequity to the moving party if
the action is not stayed; and (3) the judicial resources saved by avoiding duplicative litigation.

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Hopple v. Prospect Mortg., LLC, Civ. Ac. No. EP-13-CV-00137-DCG, 2013 WL 5493004, at *2
(W.D. Tex. Oct. 2, 2013) (citing La. Stadium & Exposition Dist. v. Fin. Guar. Ins. Co., Civ. Ac.
No. 09–CV–235, 2009 WL 926982, at * 1 (E.D. La. Apr. 2, 2009)). In exercising its discretion,
a court should be “guided by the policies of justice and efficiency.” Boudreaux v. Metro. Life
Ins. Co., Civ. Ac. No. 95–CV–138, 1995 WL 83788, at *1 (E.D. La. Feb. 24, 1995).
The court has determined that each of the three factors in this case weigh in favor of
staying any further proceedings here until the parties have completed the administrative process
with the Secretary of Agriculture. First, there is little potential for prejudice to B & D if the stay
is granted. This case is still in its infancy—no answer has been filed and the Court has not yet
held a status conference. B & D argues that it will be prejudiced if a stay is granted because the
statute of limitations has run for it to file any claims or counterclaims against Packman in the
administrative case. Docket no. 15 at 3. However, the Secretary of Agriculture has jurisdiction
to hear a counterclaim beyond the statute of limitations if the counterclaim involves the same
transactions as the formal complaint. See Procacci Bros. Sales Corp. v. Antle Bros. & Tanimura
Bros., 47 Agric. Dec. 1504, 1510 (Sept. 13, 1988) (“This is unlike the case where a respondent
files a counterclaim involving the same transaction made the subject of a formal complaint
beyond the nine month period. In those cases, we have held that we do have jurisdiction to hear
the counterclaim.”). B & D also argues that under the rules in the administrative process, it will
only be able to recover some of its attorney’s fees if it is the prevailing party and not all
discovery procedures are available. However, as a PACA licensee, it has already acquiesced to
these rules.

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Second, denying the stay would cause Packman hardship and inequity.

Packman

contends that it is the injured party in this case, and as it initiated proceedings through the
Department of Agriculture, its choice of forum should be honored. Docket no. 9 at 4. B & D
argues that its choice of forum should be honored because it filed its Complaint with this Court
before Packman filed its formal complaint with the Secretary of Agriculture. Docket no. 15 at 2.
But this ignores the rules of the administrative process, which require Packman to first file an
informal complaint before filing a formal complaint. See 7 C.F.R. § 47.6(a)(1).
Finally, staying this case will preserve judicial resources by avoiding duplicative
litigation and the possibility of inconsistent rulings. The Secretary of Agriculture is uniquely
equipped to address the issues in this case. Staying this action while administrative proceedings
occur will allow the parties to avoid the time, expense, and uncertainty of litigating in two
forums. The Court concludes that a stay is appropriate in this case. Packman’s Motion to Stay is
granted.
Because all proceedings in this case are stayed pending resolution of the proceedings
before the Secretary of Agriculture, this case is appropriate for administrative closure. Mire v.
Full Spectrum Lending, Inc., 389 F.3d 163, 167 (5th Cir. 2004) (“District courts frequently make
use of this device to remove from their pending cases suits which are temporarily active
elsewhere (such as before an arbitration panel) or stayed (such as where a bankruptcy is
pending). The effect of an administrative closure is no different from a simple stay . . . .”); see
also CitiFinancial Corp. v. Harrison, 453 F.3d 245, 250 (5th Cir. 2006).

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CONCLUSION
Defendant Packman1, Inc.’s Motion to Stay Proceedings (docket no. 9) is GRANTED.
Accordingly, the Court ORDERS that this case is hereby STAYED. The parties are hereby
ORDERED to file quarterly status reports with this Court about the progress of the proceedings
before the Secretary of Agriculture, beginning November 18, 2016.
The Clerk’s office is DIRECTED to administratively close this case pending further order
of the Court. Though administratively closed, this case will still exist on the docket of this Court
and may be reopened upon request of any party or on the Court’s own motion. Mire, 389 F.3d at
167.
It is so ORDERED.
SIGNED this 19th day of August, 2016.

XAVIER RODRIGUEZ
UNITED STATES DISTRICT JUDGE

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