Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_04-cv-05844/USCOURTS-caed-1_04-cv-05844-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 18:4208(B) Agency Action Review

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IN THE UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF CALIFORNIA

LION RAISINS, INC., et al., ) 

 )

Plaintiffs, )

)

vs. )

)

UNITED STATES DEPARTMENT OF )

OF AGRICULTURE, )

 )

Defendant. )

)

) 

No. CV-F-04-5844 REC DLB

ORDER GRANTING IN PART AND

DENYING IN PART CROSS

MOTIONS FOR SUMMARY

JUDGMENT. 

(Docs. 6, 25)

On October 4, 2004, and February 7, 2005, the Court heard,

respectively, Plaintiffs’ and Defendant’s motions for summary

judgment. Upon due consideration of the written and oral

arguments of the parties and the record herein, the Court

resolves the motions as set forth below.

I. Factual Background

Plaintiffs (“Lion Raisins”) are a California Corporation,

Lion Raisins, Inc., that produces and packs raisins, and four

individuals - Al Lion Jr., Dan Lion, Jeff Lion, and Bruce Lion - 

who participate in the management of the corporation. 

On August 26, 1997, Lion Raisins allegedly forged or altered

Case 1:04-cv-05844-REC -DLB Document 32 Filed 05/12/05 Page 1 of 20
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 Each of the individuals as well as the corporation were 1

served between October 22, 2002 and November 5, 2002.

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an inspection certificate from the United States Department of

Agriculture (“USDA”) which they sent to a client. On October 11,

2002, the USDA’s Agricultural Marketing Service (“AMS”) filed a

complaint with the Secretary of Agriculture against Lion Raisins

for the alleged forgery (the “AMS Complaint”). AR 1. The

Hearing Clerk served Lion Raisins with the AMS Complaint, the 1

Rules of Practice and the Hearing Clerk’s service letter dated

October 11, 2002. AR 1-2. 

The clerk’s service letter stated that Lion Raisins had 20

days to file a written answer to the AMS Complaint and that

failure to file an answer or filing an incomplete answer would

constitute an admission of the allegations in the AMS Complaint

and the waiver of a hearing. AR 2. The AMS Complaint also

indicated that the Rules of Practice applied and that failure to

file an answer would result in waiver of a hearing. AR 1. 

On October 28, 2002, Lion Raisins filed a motion to extend

the time in which to file an answer to the AMS Complaint. AMS

did not oppose the request. The Chief Administrative Law Judge

granted the motion and gave Lion Raisins until December 24, 2002

to file its answer. AR 8.

On December 20, 2002, Lion Raisins filed a motion to dismiss

the AMS Complaint. AR 9. The two-page motion argued that the

AMS Complaint was barred by a five-year statute of limitations. 

On December 26, 2002, AMS moved for a decision upon admission of

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facts by reason of default on the grounds that Lion Raisins did

not file an answer before December 24, 2002, as required by the

Rules of Practice. AR 11. Entry of default would result in Lion

Raisins’ debarment from receiving USDA inspection services for,

according to the proposed decision, a period of one year. 

On January 8, 2003, Lion Raisins filed its objection to

AMS’s motion for default. AR 14. Lion Raisins argued that the

motion to dismiss constituted a timely response to the AMS

Complaint. On February 12, 2003, Lion Raisins filed a request to

file an answer to the AMS Complaint. Lion Raisins argued that

the Federal Rules of Civil Procedure permit a motion to dismiss

in lieu of an answer and that AMS would not be prejudiced by the

late filing because it knew through other litigation that Lion

Raisins denied the allegations in the AMS Complaint. AR 14. 

On November 28, 2003, the Administrative Law Judge (“ALJ”)

denied AMS’s motion for default and issued an order to show cause

why the case should not be dismissed based on the statute of

limitations issue. The ALJ stated that “Respondents [Lion

Raisins] were in default only because their timely filing was a

Motion to Dismiss, rather than an Answer to the Complaint” and

that Lion Raisins cured the default when it filed its Answer to

the AMS Complaint. AR 29 at 1 n.1. 

AMS appealed the ALJ’s decision to the USDA’s Judicial

Officer (“JO”). AMS argued that Lion Raisins’ failure to file an

answer within the time allotted should have resulted in a default

and that the motion to dismiss was insufficient. 

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On February 9, 2004, the JO issued his order. The JO agreed

with the ALJ to the extent that Lion Raisins was in default

because it filed a motion to dismiss rather than an answer, but

reversed the ALJ because, under the Rules of Practice, the filing

of the late answer did not, as the ALJ held, “cure” the default. 

Rather, the failure to file an answer constitutes an “admission

of the allegations in the Complaint and constitutes a waiver of

hearing.” AR 42 at 11. The JO remanded the case to the ALJ for

a “decision in accordance with the Rules of Practice.” 

On remand, the ALJ stated that she had erred in determining

that Lion Raisins “cured” the default when it submitted its late

answer, but again denied the default. The ALJ ruled instead that

Lion Raisins’ objections to AMS’s motion for default were

“‘meritorious’ within the meaning of 7 C.F.R. § 1.139, even

though mistaken.” AR 50 at 2. The ALJ’s reasons included:

• Neither Respondents’ counsel’s mistakes nor my

errors should be permitted to deprive Respondents

of a fair hearing on the merits. It would be

unjust for Respondents to suffer such a

disproportionately harsh consequence as debarment

without an opportunity for a hearing, just because

their lawyer chose to file a preliminary motion, a

motion to dismiss, as their response, a procedure

that is not effective under the Rules of Practice. 

It likewise would be unjust for Respondents to

suffer debarment without an opportunity for a

hearing, just because I erred in failing to apply

the Rules of Practice.

• Respondents have been and continue to be defending

vigorously against the allegations in Docket No. I

& G 01-0001 and in the within proceeding, and it

is ludicrous to contemplate that they would

default. . . . 

• Respondents’ response to the Complaint was timely

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filed, even though it was a Motion to Dismiss

instead of an answer.

• Respondents’ Motion to Dismiss, even while

mistaken, raises a statute of limitations issue,

which, even if not actionable under the Rules of

Practice, is the type of jurisdictional issue that

I prefer be brought to my attention at the

beginning of a case. A judge needs to determine

his authority to take action.

• Respondents’ objections to Complainant’s motion

for the adoption of a default decision, even

though mistaken, were timely filed.

• Respondents did not fail to file their answer. 

See 7 C.F.R. § 1.139, the first sentence. 

Respondents filed their answer 50 days late, on

February 12, 2003. . . .

AR 50 at 4. The ALJ also found, based on these reasons, that

there was good cause to grant Lion Raisins’ request to file its

late answer. Id. at 5. 

AMS again appealed and on May 24, 2004, the JO issued the

final order. The JO reversed the ALJ’s February 27, 2004

decision, finding that “the ALJ erroneously found Respondents’

objection meritorious” because the Rules of Practice specifically

“state the time within which an answer must be filed and the

consequences of failing to file a timely answer.” AR 59 at 14. 

The JO issued a Decision and Order which held that Lion Raisins’

failure to file an answer was an admission of the allegations in

the complaint and constituted a waiver of a hearing under the

Rules of Practice. AR 59 at 19. 

The JO further held that application of the default

provisions of the Rules of Practice was consistent with Lion

Raisins’ Fifth Amendment due process rights and ordered that

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“Respondents, their agents, officers, subsidiaries, and

affiliates, directly or indirectly through any corporate or other

device are debarred for 1 year from receiving inspection services

under the Agricultural Marketing Act.” AR 59 at 20.

II. Procedural History

Lion Raisins filed its Complaint for review of a final

agency action on June 15, 2004. The USDA is named as Defendant,

and the Complaint alleges eleven separate causes of action,

summarized below: 

1- Violation of the Administrative Procedures Act.

Lion Raisins alleges that the JO’s decision ordering

the default and debarment was arbitrary, capricious and

an abuse of discretion and/or otherwise not in

accordance with the law.

2- Violation of Due Process. Lion Raisins alleges that

the JO violated Lion Raisins’ due process rights in

entering the default despite the filing of the motion

to dismiss, the filing of the late answer and the ALJ’s

decision allowing the late answer to be filed.

3- Lack of jurisdiction of the USDA. Lion Raisins

alleges that because the underlying action was barred

by the statute of limitations, the USDA was without

jurisdiction to debar Lion Raisins.

4- Debarment is an improper penalty. Lion Raisins

alleges that debarment is not authorized under the

Agricultural Marketing Act of 1946.

5- Debarment is an improper penalty. Lion Raisins

alleges that the 1946 Act does not permit debarment

from inspections that are mandatory under the Raisin

Marketing Order.

6- Violation of Due Process. Lion Raisins alleges that

the period of debarment was more onerous that the

relief requested in the USDA complaint.

7- The JO lacked authority to debar Lion Raisins. As

far as the Court can discern, this claim is identical

to claim five. 

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8- Eighth Amendment Violation. Lion Raisins alleges

that the debarment order runs afoul of the Eighth

Amendment’s cruel and unusual punishment and/or

excessive fines provision.

9- Debarment cannot occur as to incoming inspections.

Lion Raisins alleges that because the alleged

falsification took place in outgoing inspections,

debarment of inspections relating to incoming raisins

is arbitrary and capricious.

10- The integrity of the USDA inspection system has

been remedied. Lion Raisins alleges that, because the

USDA has altered its inspection certificate process

since the alleged falsification, debarment is not

necessary to protect the integrity of the system.

11- Injunctive relief. Lion Raisins seeks to enjoin

the USDA from debarring Lion Raisins pending full and

final review of the administrative decision.

The Complaint seeks declaratory and injunctive relief.

Lion Raisins filed a motion for partial summary judgment on

the fourth and fifth causes of action only, arguing that summary

adjudication in its favor on either of those claims would obviate

the need for further proceedings. USDA subsequently filed a

motion for summary judgment as to claims one, two and six. USDA

asserts that the two motions dispose of all of claims, arguing

that Claims 3 and 7-10 are derivative and that Claim 11 is moot. 

III. Issues for Review 

Claim one states the two separate issues for review in this

administrative decision. The first issue is whether the entry of

default was proper. Claims two and three relate to this

question. The second issue, which need only be reached if the

Court determines that the entry of default was proper, is whether

the debarment was proper. Claims four through ten relate to this

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question. Claim eleven is moot because the JO stayed the

debarment order pending review.

IV. Legal Standard

Summary judgment is appropriate when the undisputed facts

demonstrate that the moving party is entitled to judgment as a

matter of law. Fed. R. Civ. P. 56(c). Summary judgment is

particularly appropriate in cases involving the review of an

administrative record. Adams v. United States, 318 F.2d 861, 865

(9th Cir. 1963). 

The Administrative Procedures Act (“APA”), 5 U.S.C. § 701 et

seq., sets forth the standard governing judicial review of

decisions made by federal administrative agencies. Dickinson v.

Zurko, 527 U.S. 150, 152, 119 S. Ct. 1816, 144 L. Ed. 2d 143

(1999). Under the APA, a decision in a formal agency action may

be set aside if it is found to be “arbitrary, capricious, an

abuse of discretion, or otherwise not in accordance with the

law.” 5 U.S.C. § 706(2)(A). Agency decisions may also be

reversed if they are contrary to constitutional right, in excess

of statutory jurisdiction, or without observation of required

procedure. Id. 

Review under the arbitrary and capricious standard is narrow

and the reviewing court may not substitute its judgment for that

of the agency. Marsh v. Oregon Natural Resources Council, 490

U.S. 360, 376, 109 S. Ct. 1851, 104 L. Ed. 2d 377 (1989). An

agency’s findings of fact must be upheld if supported by

substantial evidence and its conclusions of law are reviewed de

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Obviously, if the Federal Rules of Civil Procedure did 2

apply, this case would not have reached this point. Rule 55

specifies that default may only be had where a party fails to

“plead or otherwise respond.” Fed. R. Civ. P. 55(a).

9

novo. Potato Sales Co. v. USDA, 92 F.3d 800, 803 (9th Cir.

1996). Also, while a JO is entitled to review an ALJ’s

determination, 7 C.F.R. § 557(b), a court is free to consider an

ALJ’s findings in determining whether the JO’s decision was

proper. Bosma v. USDA, 754 F.2d 804, 808 (9th Cir. 1984). 

V. Propriety of the Default 

A. The Relevant Rules of Practice

The Rules of Practice, 7, C.F.R. § 1.130 et seq., apply to

“[a]djudicatory proceedings under the regulations promulgated

under the Agricultural Marketing act of 1946 (7 U.S.C. 1621 et

seq.) for the denial or withdrawal of inspection, certification,

or grading service.” 7 C.F.R. §§ 1.131(b)(1), 50.1, 52.54(a). 

It is the Rules of Practice rather than the Federal Rules of

Civil Procedure, that govern USDA regulatory actions such as

this. See AR 29 (acknowledging that “although many 2

administrative proceedings are governed by the Federal Rules of

Civil Procedure, this one is not”); see also 7 Federal

Administrative Practice § 7702 (West 2001) (Federal Rules of

Civil Procedure “are not binding on the agency unless the agency

adopts them”); Fed. R. Civ. P. 1 (specifying that rules govern

proceedings in United States district courts); Pacific Gas &

Elec. Co. v. FERC, 746 F.2d 1383, 1387 (9th Cir. 1984) (finding

federal rules inapplicable in agency proceedings).

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The Rules of Practice differ from the Federal Rules of Civil

Procedure in that an answer must be filed within 20 days after

the service of the complaint. 7 C.F.R. § 1.136. Section 1.136

specifies the content of the answer and is similar to Rule 8(b)

of the Federal Rules of Civil Procedure. It specifies that an

answer shall “clearly admit, deny, or explain each of the

allegations” and set forth any defenses. Id. Section 1.136

further provides that “[f]ailure to file an answer within the

time provided under paragraph (a) of this section shall be

deemed, for purposes of the proceeding, an admission of the

allegations in the Complaint . . ..” Id.

Section 1.139 of the Rules of Practice describes the

procedure upon failure to file an answer or admission of facts. 

It provides, in pertinent part, that:

The failure to file an answer, or the admission by the

answer of all the material allegations of fact

contained in the complaint, shall constitute a waiver

of hearing. Upon such admission or failure to file,

complainant shall file a proposed decision . . . the

respondent may file . . . objections thereto. If the

Judge finds that meritorious objections have been

filed, complainant’s Motion shall be denied with

supporting reasons. . . . .

7 C.F.R. § 1.139.

The Rules of Practice do not have an equivalent to Rule 12

of the Federal Rules of Civil Procedure. Section 1.143 of the

Rules of Practice provides that “[a]ny motion will be entertained

other than a motion to dismiss on the pleading.” Id. at § 1.143. 

Last, section 1.147 provides that the “time for the filing of any

document or paper required or authorized under the rules in this

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 Though neither party moved for summary adjudication of this 3

claim, Lion Raisins sufficiently briefed the issue in its

opposition to USDA’s motion. See Pls.’ Opp’n at 5-7.

11

part to be filed may be extended by the Judge or the Judicial

officer . . . if . . . there is good reason for the extension.”

Id. at § 1.147(f). 

B. Count Three - Lack of Subject Matter Jurisdiction3

Lion Raisins argues that because the AMS Complaint was

barred by the statute of limitations the JO lacked jurisdiction

to act in the case. Lion Raisins asserts that its “motion should

be regarded as a permissible motion to dismiss for lack of

jurisdiction, specifically for failure to state a claim upon

which relief can be granted, rather than as an arguably

impermissible motion to dismiss on the pleadings.” Pls.’ Opp’n

at 6. In support of this argument Lion Raisins quotes from EEOC

v. Ingersoll Johnson Steel Co., 583 F. Supp. 983, 985 (D. Ind.

1984), in which the court construed a motion for judgment on the

pleadings, made pursuant to Rule 12(c) of the Federal Rules of

Civil Procedure, to be a motion to dismiss for lack of subject

matter jurisdiction pursuant to Rule 12(b)(1). 

This argument lacks merit. First, the Rules of Practice and

not the Federal Rules of Civil Procedure governed the case below. 

Second, Lion Raisins misquotes the Rules of Practice, which

prohibit a “motion to dismiss on the pleading” and not, as Lion

Raisins asserts, a “motion to dismiss on the pleadings,” which

Lion Raisins further argues is akin to a motion for judgment on

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the pleadings. Third, even if the Federal Rules of Civil

Procedure did apply, the statute of limitations is an affirmative

defense, see Fed. R. Civ. P. 8(c), to be raised pursuant to Rule

12(b)(6) and is irrelevant to a court’s subject matter

jurisdiction, which is properly addressed under Rule 12(b)(1). 

Lion Raisins’ argument that a motion pursuant to Rule 12(b)(6) is

a “motion to dismiss for lack of jurisdiction, specifically for

failure to state a claim upon which relief can be granted” is

untenable. 

Lion Raisins similarly argues that “a meritorious statute of

limitations defense deprives the USDA court of jurisdiction to

act, or take any action in the case, except to resolve the

statute of limitations defense.” Pls.’ Resp. to Def.’s UMF No.

6. Again, the case cited by Lion Raisins, Barnett v. Brown, 83

F.3d 1380, 1383 (Fed. Cir. 1996), does not support its position. 

In Barnett, the Federal Circuit determined that, because of a

specific jurisdictional statute, the Court of Veteran’s Appeals

“does not have jurisdiction to consider a claim which it

previously adjudicated unless new and material evidence is

presented and before the Board may reopen such a claim, it must

so find.” Id. at 1384. No such statute has been argued to apply

here and Barnett is irrelevant. 

The ALJ’s characterization of the statute of limitations as

jurisdictional issue was incorrect. Affirmative defenses relate

to the merits of a case and the JO did not lack jurisdiction on

this basis. Accordingly, the Court will exercise its authority

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to GRANT summary adjudication sua sponte in favor of USDA as to 

claim three.

C. Counts One & Two - The Default as a Violation of the APA

Claim one which alleges in part that the entry of the

default violates the APA. Claim two alleges that the JO acted

arbitrarily and capriciously, abused its discretion and violated

Lion Raisins’ due process rights when it treated Lion Raisins’

motion to dismiss as an insufficient response and entered the

default. The parties’ papers do not completely distinguish

arguments related to claim one from those related to claim two,

and, because the relevant issue in both is whether the JO acted

properly, the Court will address these claims together.

1. The JO’s Decision

The objection Lion Raisins raised in the opposition to the

motion for entry of default was that Lion Raisins “timely filed a

response to the complaint, and filed it before the December 24,

2002 deadline.” AR 14. The ALJ found the objection meritorious

“even though mistaken” because such a filing would have been

permissible under the Federal Rules of Civil Procedure. AR 50 at

3. The ALJ also found that good cause was shown for allowing

Lion Raisins to file its answer because it “would be unjust” to

deprive Lion Raisins of a hearing when debarment was at stake. 

The JO disagreed and granted the default. The JO relied on

the language of the Rules of Practice and on the fact that Lion

Raisins was served with a copy of the Rules of Practice and

otherwise had notice of the requirement. AR 59 at 14-18. The JO

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 A search of the Ninth Circuit databases in both LEXIS and 4

Westlaw for 7 C.F.R. § 1.136, section 1.136 or rule 1.136 did not

reveal a single citation. A similar search for section 1.139

revealed one unpublished and inapposite case.

14

found that the motion to dismiss did not meet the requirements of

an answer, that Lion Raisins’ failure to file a timely answer was

an admission of the allegations in the AMS Complaint and that

default was appropriate. AR 59 at 19. While the JO noted that

Lion Raisins filed a request to file an answer 50 days after the

answer was due, the JO did not address the ALJ’s determination

that “good reason” existed for extending the time in which to

file an answer and allowing the answer to be filed. 

2. Discussion

The Court begins its discussion of these claims by noting

that there is a lack of published authority regarding the entry

of defaults pursuant to the Rules of Practice both in and out of

the Ninth Circuit. Additionally, other than mentioning the 4

words “arbitrary and capricious,” neither party sets forth the

appropriate standard of review. In Kirk v. INS, 927 F.2d 1106,

1108-09 (9th Cir. 1991), the Ninth Circuit reviewed the entry of

default in an immigration decision by an ALJ that was upheld by

the chief administrative hearing officer (“CAHO”). The court

declined to apply the standard of Rule 60 of the Federal Rules of

Civil Procedure to the agency’s entry of default because “the

administrative rules provide[d] a mechanism for vacating default

judgment.” Id. at 1109. 

Two paragraphs earlier, however, in ruling that “the ALJ did

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 USDA cites what appears to be one of the decisions that was 5

overruled by the Eighth Circuit in Oberstar, In the Matter of Paul

15

not err in ordering judgment by default, nor did the CAHO err in

affirming that action,” the court cited Direct Mail Spec. v.

Eclat Computerized Tech., 840 F.2d 685, 690 (9th Cir. 1988). Id. 

Direct Mail involved the setting aside of an entry of default

judgment pursuant to Rule 60. The only apparent basis for the

pinpoint citation in Kirk is the standard for vacating default

judgments: “We review the decision of the district court for

abuse of discretion.” Direct Mail, 840 F.2d at 690. More

important, the APA itself provides that agency actions may be

reversed if shown to be an abuse of discretion. 5 U.S.C. §

706(2)(A). Thus while Rule 60 of the Federal Rules of Civil

Procedure and the principles behind it do not necessarily

establish the standard itself, both provide helpful guidelines

for determining whether discretion has been abused. 

Additionally, unlike the situation in Kirk, 927 F.2d at

1109, the Rules of Practice do not have a “mechanism for vacating

default judgment.” The only way to avoid default is to object

beforehand; there is no procedural avenue for relief once a

default is entered by the JO. Finally, the Court observes that

the “meritorious objections” standard appears consistent with the

standard applied by other agencies, which is whether good cause

existed for failing to file an answer. 

The Court finds the Eighth Circuit case Oberstar v. FDIC,

987 F.2d 494, 504 (8th Cir. 1993), helpful in this matter. In 5

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26 E. Oberstar, 1992 WL 813099. See Def.’s Reply at 9. 

16

Oberstar, the plaintiff, Oberstar, moved the court to set aside a

default that was entered against him pursuant to the FDIC rules

despite the fact that he had filed a late answer. At the time

the default was entered, Oberstar was in the process of appealing

the outcome of another FDIC case against him. The court reversed

the default as an abuse of discretion. Stating:

The judicial preference for adjudication on the merits

goes to the fundamental fairness of the adjudicatory

proceedings. Fairness concerns are especially

important when a government agency proposes to assess a

quasi-criminal monetary penalty on a private

individual. By entering the default judgment against

Oberstar because of his minor deviation from the FDIC’s

procedural rule, with no showing of prejudice to the

agency, the Board unfairly deprived Oberstar of his

right to a statutorily mandated hearing. We hold that

the Board’s application of the FDIC default regulation

in this case was an abuse of discretion.

Id. The court further stated that even if it applied the FDIC’s

regulation, the default was still improper because the reason

given for not filing the answer constituted good cause,

particularly given that the FDIC commenced a second action

against Oberstar while the outcome of the first was still

pending. Id. 

The Court agrees with the Eighth Circuit that fairness

concerns are paramount in cases such as this where quasi-criminal

sanctions are imposed. The ALJ based her decision finding the

objection meritorious and allowing the late answer on this very

premise. As quoted, supra, “[i]t would be unjust for [Lion

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Raisins] to suffer such a disproportionately harsh consequence as

debarment without an opportunity for a hearing . . ..” AR 50 at

4. Further, there a strong preference that cases be decided on

their merits whenever possible. O’Connor v. Nevada, 27 F.3d 357,

364 (9th Cir. 1994). This principle is not rendered irrelevant

by the fact that the adjudicatory proceeding is administrative

rather than judicial. 

Here, the JO, unlike the ALJ, ignored the tenet that cases

should be decided on their merits whenever possible and failed to

consider the overall fairness of the proceedings given what was

at stake. The JO abused his discretion by entering the default

judgment against Lion Raisins because of its minor deviation from

the Rules of Practice with no showing of prejudice to the USDA. 

The refusal to allow the late answer similarly deprived Lion

Raisins of the hearing to which it was entitled. 

There is no indication that, as Lion Raisins’ asserted in

its request to file its answer, USDA would be prejudiced by

allowing the answer to be filed. USDA was made aware of Lion

Raisins’ intent to defend itself in the matter when it received

the motion to dismiss. Having been made aware of this intent,

albeit through a technically procedurally ineffective method,

USDA cannot possibly claim it would be prejudiced by the denial

of the default and allowing the answer to be filed. This is

unlike a typical default case, in which prejudice may be found

where a party has failed to respond at all. Additionally, the

ALJ took judicial notice on her own motion of the fact that all

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 This is not to imply that filings or occurrences in one 6

action have any effect on those in a related case; the question

here is prejudice. USDA was made aware by the motion to dismiss

that Lion Raisins intended to defend in the action in addition to

being aware that Lion Raisins was defending itself in other cases.

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the parties, including herself, were involved in a second matter

involving the same issues. The existence of this parallel

action, in which Lion Raisins was “defending vigorously,” AR 50

at 4, further demonstrates lack of prejudice because, as the ALJ

noted, it would be “ludicrous” to contemplate that Lion Raisins

would default. Accordingly, there can be no argument that USDA 6

somehow relied to its detriment on Lion Raisins’ failure to file

an answer.

Also with respect to fairness, the Court notes, but does not

base its decision on, that despite the fact that Lion Raisins

filed its motion four days (two business days) prior to filing

deadline for the answer, USDA did not bring the procedural error

to Lion Raisins’ attention, but rather leapt at the opportunity

to capitalize on the mistake that was made. A party is not, of

course, required to instruct an opponent on the applicable

procedural rules. However, capitalization on a mere procedural

error is wholly offensive to the judicial tenet that cases be

decided on the merits. 

Moreover, as in Oberstar, the outcome is the same even if

the agency’s Rules of Practice are applied. As characterized by

the ALJ, Lion Raisins was apparently “oblivious” to the fact that

the Rules of Practice were the applicable rules and did not allow

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 The Court comments that it appears contrary to all notions 7

of judicial and administrative economy that the USDA apparently

decided to bring a second complaint rather than amend its other

complaint to add the allegations at issue here. 

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for the filing of a motion to dismiss. As both the ALJ and Lion

Raisins noted, in nearly any other proceeding before any other

adjudicatory body, a motion to dismiss is permissible. While the

Court acknowledges that ignorance of the law is generally no

excuse, where, as here, it is coupled with a complete lack of

prejudice to the opposing party, this mere procedural error

constitutes both a meritorious objection to the default as well

as good reason for allowing the answer to be filed. The Court

finds none of the non-binding authority cited by USDA persuasive

on this issue, particularly given the posture, as discussed

above. The error made here was, as the ALJ determined,

understandable. 

Further, in Oberstar, the court characterized the FDIC’s

filing of a second action while the first was still pending as

“unfair harassment” and found the attorney’s delay in answering

correspondingly understandable 987 F.2d at 504. Similarly, here,

as mentioned, there was a second action that was already pending

between the parties. It was not unreasonable for counsel for

Lion Raisins to attempt to save all parties a procedural step by

filing a motion to dismiss based on the statute of limitations,

as a finding in Lion Raisins’ favor would eliminate the need for

further action.7

///

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 Although the JO abused his discretion, Lion Raisins’ 8

attacks on the JO’s objectivity are not well taken. See Pls.’

Opp’n at 9:5-9. None of the cases cited by Lion Raisins involve

the JO who decided this case. 

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Accordingly, because the JO abused his discretion in 8

entering the default, USDA’s request for summary adjudication is

DENIED and summary adjudication is GRANTED sua sponte in favor of

Lion Raisins as to the first portion of claim one and as to claim

two. Because the default was inappropriate, the Court need not

address the claims related to the imposition of the debarment.

ACCORDINGLY, IT IS ORDERED that summary adjudication as to

claim three is GRANTED in favor of the USDA.

FURTHER, summary adjudication is GRANTED as to claim two is

GRANTED in favor of Lion Raisins and DENIED as to the USDA. 

FURTHER, summary adjudication is GRANTED IN PART as to claim

one in favor of Lion Raisins and DENIED IN PART as to the USDA.

FURTHER, this case is remanded for further proceedings

consistent with this order. 

IT IS SO ORDERED.

Dated: May 12, 2005 /s/ Robert E. Coyle 

ia40ij UNITED STATES DISTRICT JUDGE

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