Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_08-cv-00860/USCOURTS-casd-3_08-cv-00860-0/pdf.json

Nature of Suit Code: 891
Nature of Suit: Agricultural Acts
Cause of Action: 07:499 Agricultural Commodities Act

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

SAMMY’S PRODUCE, INC.,

Plaintiff,

CASE NO. 08-CV-860 H (POR)

ORDER GRANTING

PLAINTIFF’S MOTION FOR

PRELIMINARY INJUNCTION

vs.

HIERRO’S MARKET & CARNICERIA,

INC.; and EDUARDO HIERRO,

Defendants.

On May 14, 2008, plaintiff Sammy’s Produce, Inc. filed a complaint against 

defendants Hierro’s Market & Carniceria, Inc. (“Hierro’s Market”) and Eduardo Hierro.

(Doc. No. 1.) On May 15, 2008, Plaintiff filed an ex parte application for a temporary

restraining order (“TRO”) enforcing a statutory trust pursuant to Section 5(c) of the Perishable

Agriculture Commodities Act (“PACA”), 7 U.S.C. § 499e(c), by restraining the transfer of

assets of Hierro’s Market and Carniceria, Inc. (Doc. No. 3.) Plaintiff also filed a motion for

a preliminary injunction. (Doc. No. 4.) On May 16, 2008, the Court issued an order setting

a hearing on Plaintiff’s motion for a TRO for May 19, 2008. (Doc. No. 6.) The Court directed

Plaintiff to give notice to Defendants of the hearing and instructed Plaintiff to make reasonable

efforts to effect service upon Defendants prior to the hearing. (Id.)

On May 19, 2008, the Court held a hearing on Plaintiff’s motion for a TRO. Bryan W.

Pease appeared for Plaintiff. Defendant Eduardo Hierro appeared with the assistance of an

interpreter. The Court granted Plaintiff’s motion for a TRO and set a hearing regarding

Case 3:08-cv-00860-H-POR Document 10 Filed 05/27/08 Page 1 of 5
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Plaintiff’s motion for a preliminary injunction for May 27, 2008. (Doc. Nos. 7, 8.) On May

27, 2008, Bryan W. Pease appeared on behalf of Plaintiff. For the reasons discussed below,

the Court grants Plaintiff’s motion for a preliminary injunction. 

Background

Plaintiff is a wholesaler of produce. (Decl. of Yan Skwara ISO App. for TRO 

(“Skwara Decl.”) ¶ 3.) Plaintiff and defendant Hierro’s Market are both produce “dealers”

as defined by PACA. 7 U.S.C. § 499a(b)(6). Plaintiff states that defendant Eduardo Hierro

is, and was during the time in question, responsible for the daily operations of Hierro’s

Market and was in a position of control over the trust assets belonging to Plaintiff. (Skwara

Decl. ¶ 4.) Plaintiff alleges that between June 8, 2007 and July 27, 2007, Plaintiff sold and

delivered to Defendants wholesale quantities of produce worth $96,547.59. (Id. ¶ 6.) 

Defendants provided to Plaintiff several checks that were dishonored by the bank due to

insufficient funds. (Id. ¶ 12.) Plaintiff has provided the Court with copies of outstanding

invoices for produce sold and delivered to Defendants, as well as copies of checks that

were dishonored for insufficient funds. (Skwara Decl., Exs. 1, 2.) At the May 19, 2008

hearing on Plaintiff’s motion for a TRO, Mr. Hierro stated that he intends to pay Plaintiff

but lacks adequate funds at the present time, and therefore desires an agreement regarding

monthly payments. Mr. Hierro acknowledged that his signature appeared on many of the

invoices submitted by Plaintiff but disputed other invoices. 

I. Plaintiff’s Motion For a Preliminary Injunction

A. Statutory Trust Under PACA

Congress enacted PACA in 1930 to “suppress unfair and fraudulent practices in the

marketing of fruits and vegetables in interstate and foreign commerce.” 49 Fed. Reg. at

45737. PACA “provides . . . aid to [agricultural] traders in enforcing their contracts.” Id.

In 1984, Congress amended PACA to insure that suppliers of produce are paid by

providing for the imposition of a statutory trust on all produce-related assets. 7 U.S.C. §

499e(c)(2). Under PACA, “perishable agricultural commodities, inventories of food or

other derivative products, and any receivables or proceeds from the sale of such

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commodities or products, are to be held in a non-segregated floating trust for the benefit of

unpaid sellers. Tanimura & Antle, Inc. v. Packed Fresh Produce, Inc., 222 F.3d 132, 136

(3d Cir. 2000). The produce buyer is the trustee of a statutory trust under PACA. Id.

PACA requires that the trust be maintained for the benefit of the suppliers, sellers or agents

who provided the commodities until full payment has been made. 7 U.S.C. § 499e(c)(2). 

In providing for the imposition of this statutory trust, Congress intended to provide “a selfhelp tool that will enable [sellers of produce] to protect themselves against the abnormal

risk of losses resulting from slow-pay and no-pay practices by buyers or receivers of fruits

and vegetables.” 49 Fed. Reg. at 45737. 

Under PACA, failure to maintain the trust assets and to make full payment promptly

to the trust beneficiary is unlawful. 7 U.S.C. § 499b(4). Produce dealers must “maintain

trust assets in a manner that such assets are freely available to satisfy outstanding

obligations to sellers of perishable agricultural commodities.” 7 C.F.R. § 46.46(e)(1). 

PACA prohibits acts or omissions, including dissipation of trust assets or impairment of a

seller’s right to obtain payment, that are inconsistent with this duty. Id. PACA provides

that the “district courts of the United States are vested with jurisdiction specifically to

entertain . . . actions by trust beneficiaries to enforce payment from the trust.” 7 U.S.C. 

§ 499e(c)(5).

B. Preliminary Injunction – Legal Standard

A plaintiff is entitled to a preliminary injunction when the plaintiff demonstrates a

strong likelihood of success on the merits, irreparable harm if injunctive relief is not

granted, that the threatened injury to the plaintiff outweighs whatever damage the proposed

injunction might cause to the opposing party, and that the issuance of the injunction will

not be adverse to the public interest. See Regents of Univ. of Cal. v. ABC, Inc., 747 F.2d

511, 515 (9th Cir. 1984). Alternatively, in the Ninth Circuit a plaintiff may be entitled to a

preliminary injunction by establishing “the existence of serious questions going to the

merits and that the balance of hardships tips sharply in his favor.” See Roe v. Anderson,

134 F.3d 1400, 1402 (9th Cir. 1998). These alternative formulations “represent two points

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on a sliding scale in which the required degree of irreparable harm increases as the

probability of success decreases.” Id.; see Clear Channel Outdoor Inc. v. City of Los

Angeles, 340 F.3d 810, 813 (9th Cir. 2003).

C. Plaintiff’s Motion Demonstrates That Injunctive Relief Is Warranted

Here, the Court concludes that Plaintiff’s complaint, motion and supporting

materials demonstrate a strong likelihood of success on the merits, that Plaintiff will suffer

irreparable harm if injunctive relief is not granted, that the threatened injury to Plaintiff

outweighs whatever damage injunctive relief might cause to Defendants, and that the

issuance of an injunction will not be adverse to the public interest. See Regents of Univ. of

Cal. v. ABC, Inc., 747 F.2d 511, 515 (9th Cir. 1984).

First, the Court concludes that Plaintiff has met its burden to establish a strong

likelihood of success on the merits of Plaintiff’s claim for relief under PACA. Plaintiff is a

supplier or seller of wholesale quantities of produce. Plaintiff sold to Defendants wholesale

quantities of produce in the aggregate amount of $96,547.59. (Skwara Decl. ¶ 5-10, Ex. 1.) 

That amount remains past due and unpaid. (Id.; see id., Ex. 2.) Plaintiff preserved its

status as a trust creditor of Defendants under PACA by sending to Hierro’s Market and

Carniceria, Inc., invoices containing the language required by 7 U.S.C. 

§ 499e(c)(4). (Skwara Decl. ¶ 10, Ex. 1.) At the May 19, 2008, hearing, Mr. Hierro stated

that he disputed some of the invoices submitted by Plaintiff. (E.g., Doc. No. 3-3 at 24

($5,037), 26 ($4,432), 32 ($11,092).) Based on the evidence before the Court, the Court

concludes that Plaintiff has a strong likelihood of success on Plaintiff’s claim that

Defendants have failed to pay Plaintiff for produce supplied by Plaintiff in accordance with

the trust provisions of PACA. (Skwara Decl. ¶ 12-14.) Defendants have advised Plaintiff

that Defendants are unable to pay for the produce. (Id.) At the May 19, 2007 hearing on

Plaintiff’s motion for a TRO, Defendant stated that he desired to negotiate a payment plan. 

Second, the Court concludes that Plaintiff’s motion demonstrates that Plaintiff will

suffer irreparable injury in the absence of injunctive relief enforcing the statutory trust

pursuant to PACA. See Carribean Marine Services Co. v. Baldridge, 844 F.2d 668, 674

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(9th Cir. 1988) (plaintiff must demonstrate immediate threatened injury). Plaintiff provides

evidence that Defendants are dissipating trust assets. See Tanimura & Antle, Inc. v. Packed

Fresh Produce, Inc., 222 F.3d at 139 (“dissipation of PACA trust assets can render money

damages inadequate, thereby necessitating equitable relief, especially when the dissipation

will clearly result in the debtor’s inability ultimately to make payment”). The Court

concludes that this threatened injury to Plaintiff outweighs the potential harm, if any, to

Defendants of granting injunctive relief. Finally, the Court concludes that granting interim

injunctive relief is not adverse to the public interest. See Regents of Univ. of Cal. v. ABC,

Inc., 747 F.2d at 515. Congress enacted PACA to protect the public interest and provide a

remedy to wholesalers such as Plaintiff when they are not paid for produce they sell. See 7

U.S.C. § 499e(c)(1). In sum, the Court concludes that Plaintiff’s motion satisfies the

applicable standard for granting a preliminary injunction.

Conclusion

For the reasons discussed above, the Court grants Plaintiff’s motion for a

preliminary injunction enforcing the statutory trust pursuant to section 5(c) of the PACA, 7

U.S.C. § 499e(c), by restraining the transfer of assets of defendant Hierro’s Market &

Carniceria, Inc. Pursuant to Rule 65(c), the Court orders a bond in the amount of $750.00. 

 IT IS SO ORDERED.

DATED: May 27, 2008

MARILYN L. HUFF, District Judge

UNITED STATES DISTRICT COURT

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