Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_15-cv-01600/USCOURTS-casd-3_15-cv-01600-0/pdf.json

Nature of Suit Code: 891
Nature of Suit: Agricultural Acts
Cause of Action: 07:0499 Agricultural Commodities Act

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

TQM FOOD SERVICES, INC., a

California corporation,

Plaintiff,

CASE NO. 3:15-cv-1600-H

(DHB)

(1) ORDER GRANTING

PLAINTIFF’S MOTION FOR

TEMPORARY

RESTRAINING ORDER; 

(2) ORDER TO SHOW

CAUSE WHY

PRELIMINARY

INJUNCTION SHOULD NOT

ISSUE; 

(3) SCHEDULING

PRELIMINARY

INJUNCTION HEARING

[Doc. No. 2]

vs.

FREEDOM MARKET, INC., a

California corporation dba Somos

Tacos & Atomic Wings; SALEM

SOMO, an individual; and

FEDDWON SOMO, an individual,

Defendants.

On July 20, 2015, Plaintiff TQM Food Services, Inc. (“Plaintiff”) filed a

complaint against Defendants Freedom Market, Inc., Salem Somo, and Feddwon Somo

(collectively, “Defendants”), alleging violations of the Perishable Agricultural

Commodities Act (“PACA”), 7 U.S.C. § 499e(c)(5). (Doc. No. 1.) Also on July 20,

2015, Plaintiff filed a motion for a temporary restraining order. (Doc. No. 2.) The

Court ordered Plaintiff to serve Defendants with a copy of the complaint, a copy of the

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motion for a temporary restraining order, and a copy of this order no later than July 21,

2015 at 12:00 p.m. (Doc. No. 4.) Defendants did not file an opposition. The Court

held a hearing on Plaintiff’s motion on July 24, 2015 at 10:30 a.m. in Courtroom 15A.

Attorney Mitch Wallis appeared for Plaintiff. Defendants did not appear. For the

reasons that follow, the Court grants Plaintiff’s motion for a temporary restraining

order. The Court also orders Defendants to show cause by July 31, 2015 why a

preliminary injunction should not issue and schedules a preliminary injunction hearing

for August 11, 2015 at 10:30 a.m. in Courtroom 15A. 

Background

According to the complaint, Plaintiff is a company that buys and sells wholesale

quantities of perishable agricultural commodities. (Doc. No. 1 at ¶ 1.) Plaintiff states

that was licensed as a dealer under PACA at all relevant times. (Id.) Plaintiff alleges

that Defendants Salem and Feddwon Somo are shareholders and officers of Freedom

Market, Inc. (“Somos”), a business that buys wholesale quantities of produce in

interstate commerce and is subject to PACA. (Id. at ¶ 2.) Plaintiff alleges that

Defendants had control over PACA trust assets belonging to Plaintiff. (Id.)

Plaintiff states that it delivered $5,005.04 worth of perishable agricultural

commodities to Defendants between December 3, 2014 and December 8, 2014. (Id. at

¶¶ 1, 4.) Plaintiff alleges that it sent invoices containing the language required by 7

U.S.C. § 499e(c)(4) to Defendants. (Doc. No. 2-1 at 4-5.) According to Plaintiff,

Defendants do not dispute the debt but have failed to repay Plaintiff. (Doc. No. 1 at ¶¶

8, 9.) Plaintiff also alleges that Defendants told Plaintiff that they lacked sufficient

funds to pay the debt. (Id. at ¶ 9.) 

Plaintiff asks the Court to issue a temporary restraining order against Defendants

pursuant to Rule 65 of the Federal Rules of Civil Procedure. (Doc. No. 2 at 1.)

Specifically, Plaintiff asks the Court to restrain the transfer of and direct to Plaintiff any

and all of Defendants’ assets, not to exceed $5,005.04 plus interest, costs, and attorney

fees. 7 U.S.C. § 499e(c). (Id.; Doc. No. 2-1 at 1.)

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Discussion

I. Legal Standards

PACA provides for the creation of a statutory trust “in which a produce dealer

holds produce-related assets as a fiduciary until full payment is made to the produce

seller.” Bowlin & Son, Inc. v. San Joaquin Food Serv. (In re San Joaquin Food Serv.,

Inc.), 958 F.2d 938, 939 (9th Cir. 1992). “The trust automatically arises in favor of a

produce seller upon delivery of produce and is for the benefit of all unpaid suppliers or

sellers involved in the transaction until full payment of the sums owing has been

received. C&E Enters., Inc. v. Milton Poulos, Inc. (In re Milton Poulos, Inc.), 947 F.2d

1351, 1352 (9th Cir. 1991). 

Plaintiff requests a temporary restraining order to preserve PACA trust assets. 

(Doc. No. 2.) The standard for a temporary restraining order is “substantially identical”

to the standard for granting a preliminary injunction. Stuhlbarg Int’l Sales Co. v. John

D. Brush & Co., 240 F.3d 832, 839 n.7 (9th Cir. 2001). A preliminary injunction is “an

extraordinary remedy that may only be awarded upon a clear showing that the plaintiff

is entitled to such relief.” Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 22

(2008); accord Earth Island Inst. v. Carlton, 626 F.3d 462, 469 (9th Cir. 2010). A party

seeking preliminary relief “must establish that he is likely to succeed on the merits, that

he is likely to suffer irreparable harm in the absence of preliminary relief, that the

balance of equities tips in his favor, and that an injunction is in the public interest.” 

Winter, 555 U.S. at 20. In the Ninth Circuit, the court may apply a sliding scale test,

under which “the elements of the preliminary injunction test are balanced, so that a

stronger showing of one element may offset a weaker showing of another.” Alliance

for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011); see also id. at

1132 (“The serious questions approach survives the Winter decision when applied as

part of the four-element Winter test.”).

//

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II. Analysis

A. Likelihood of Success on the Merits

Plaintiff has shown that it is likely to succeed on the merits of its PACA claim. 

Winter, 555 U.S. at 20. PACA applies to “perishable agricultural commodit[ies],”

defined as “[f]resh fruits and fresh vegetables of every kind and character.” 7 U.S.C.

§ 499a(b)(4). Plaintiff states that it is a licensed dealer under PACA and sells wholesale

quantities of perishable agricultural commodities. (Doc. No. 1 at ¶ 1.) Moreover, the

PACA trust provisions create a remedy for a produce dealer if a purchaser fails to pay

for certain perishable goods. 7 U.S.C. § 499e(c). Plaintiff states that it sent perishable

agricultural commodities worth $5,005.04 to Defendants between December 3 and

December 8, 2014, and alleges that Defendants have failed to pay. (Id. at ¶¶ 1, 4, 8, 9;

Doc. No. 2-1 at 2.) Finally, the trust provisions of PACA provide that an unpaid,

licensed supplier can preserve the benefits of the trust if it uses its ordinary invoice

statements to give notice of its intent to preserve the trust.1

 7 U.S.C. § 499e(c)(4). 

Plaintiff states that it preserved an interest in the PACA trust by sending invoices to

Defendants with the requisite language. (Doc. No. 1 at ¶ 7; Doc. No. 2-1 at 4-5.) For

these reasons, Plaintiff has shown a likelihood of success on the merits. Winter, 555

U.S. at 20. 

B. Likelihood of Irreparable Harm

Plaintiff has also shown that it is likely to suffer irreparable harm in the absence

of a temporary restraining order. Winter, 555 U.S. at 20. “A showing of threatened

trust dissipation amounts to a showing of a possibility of irreparable injury.” Rey Rey

Produce SFO, Inc. v. Mis Amigos Meat Market, Inc., 2008 WL 1885738 (N.D. Cal.

Apr. 24, 2008). “[O]nce the PACA trust is dissipated, it is almost impossible for a

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The invoice must contain the following statement: “The perishable agricultural

commodities listed on this invoice are sold subject to the statutory trust authorized by section

5(c) of the Perishable Agricultural Commodities Act, 1930 (7 U.S.C. 499e(c)). The seller of

these commodities retains a trust claim over these commodities, all inventories of food or other

products derived from these commodities, and any receivables or proceeds from the sale of

these commodities until full payment is received.” 7 U.S.C. § 499e(c)(4).

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beneficiary to obtain recovery.” Tanimura & Antle, Inc. v. Packed Fresh Produce, Inc.,

222 F.3d 132, 139 (3d Cir. 2000) (citation omitted). Plaintiff alleges that Defendants

have failed to pay their debt and have told Plaintiff that they lack sufficient funds to

pay. (Doc. No. 1 at ¶ 9; Doc. No. 2-1 at 4.) Therefore, Plaintiff has shown a likelihood

of irreparable harm. Winter, 555 U.S. at 20.

C. Balance of the Equities and the Public Interest

The record does not indicate that Defendants will suffer harm if the temporary

restraining order issues. Winter, 555 U.S. at 20. Instead, they would only be required

to fulfill their repayment obligations. Tanimura, 222 F.3d at 140. Further, issuing a

temporary restraining order would be in the public interest. Winter, 555 U.S. at 20. 

Congress created PACA to alleviate the burden created when purchasers of perishable

agricultural commodities fail to make payments, and stated that the statute would 

“protect the public interest.” 7 U.S.C. § 499e(c)(1). Therefore, Plaintiff has shown that

the balance of equities tips in its favor and that an injunction is in the public interest. 

Winter, 555 U.S. at 20.

Conclusion and Order

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

restraining order. Additionally:

1. Defendants are ordered to show cause in writing why they should not be

preliminarily enjoined from distributing PACA trust funds as set out in

Plaintiff’s application for a temporary restraining order. Defendants must

file a written response, if any, to this Order to Show Cause on or before 

July 31, 2015. Plaintiff may file a reply to Defendants’ response on or

before August 7, 2015. The Court schedules a preliminary injunction

hearing for August 11, 2015 at 10:30 a.m. in Courtroom 15A.

2. Pending the hearing on the Order to Show Cause, Defendants and their

respective agents, attorneys, officers, assigns, and any other of their

banking institutions must not pay, withdraw, transfer, assign, or sell any

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and all existing PACA trust assets or otherwise dispose of corporate or

personal assets to any creditors, persons, or entities until further order of

the Court.

3. Pending further order of the Court, no banking institution holding funds

for any Defendant shall pay, transfer, or permit assignment or withdrawal

of any existing PACA trust assets held on behalf of Defendants. Further,

pending further order of this Court, no banking institution holding funds

for any Defendant shall pay, transfer, or permit assignment or withdrawal

of the corporate or personal assets of any Defendants without this Court’s

express written consent. 

4. This Order is binding upon the parties to this action, their officers, agents,

servants, employees, banks, attorneys, and all other persons or entities

who receive actual notice of this Order by personal service or otherwise. 

In this regard, Defendants shall serve a copy of this Order on all financial

institutions with which any of the Defendants does any business, may do

business with, or who may be holding any PACA trust assets for or on

behalf of any of the Defendants. 

5. Due to the nature of the issues in this action, the Court dispenses with the

bond requirement contained in Federal Rule of Civil Procedure 65(c).

6. This temporary restraining order is effective on the date and time of filing

and remains in effect until the date and time of the hearing on preliminary

injunction specified above. 

//

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7. If Defendants pay Plaintiff the sum of $5,005.04, Plaintiff must

immediately file a document informing the Court of this fact so the

temporary restraining order can be dissolved and the hearing vacated.

IT IS SO ORDERED.

DATED: July 24, 2015

 

MARILYN L. HUFF, District Judge

UNITED STATES DISTRICT COURT

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