Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_19-cv-01964/USCOURTS-cand-5_19-cv-01964-1/pdf.json

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

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Case No. 19-CV-01964-LHK 

ORDER GRANTING MOTION FOR PRELIMINARY INJUNCTION

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

RATTO BROS., INC.,

Plaintiff,

v.

GOLDEN RULE PRODUCE, INC., et al.,

Defendants.

Case No. 19-CV-01964-LHK 

ORDER GRANTING MOTION FOR 

PRELIMINARY INJUNCTION

Re: Dkt. No. 3

On April 11, 2019, Plaintiff Ratto Bros., Inc. (“Ratto Bros” or “Plaintiff”) filed an ex parte

application for a temporary restraining order (“TRO”) to enjoin Defendants Golden Rule Produce, 

Inc. (“Golden Rule”) and its Chief Executive Officer, Dimitrios “Jimmy” Tsigaris (“Tsigaris”), 

(collectively, “Defendants”) from using, consuming, or otherwise dissipating trust assets under the 

Perishable Agriculture Commodities Act, 7 U.S.C. § 499a et seq. See ECF No. 2 (“TRO”). On

April 11, 2019, Plaintiff also filed the instant a motion for preliminary injunction. See ECF No. 3

(“Mot.”).

On April 16, 2019, the Court denied Plaintiff’s ex parte application for a TRO because 

Plaintiff failed to persuade the Court that notice to Defendants would result in immediate 

dissipation of trust assets. ECF No. 15 (“April 16, 2019 Order”). The Court set April 25, 2019 as 

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Case No. 19-CV-01964-LHK 

ORDER GRANTING MOTION FOR PRELIMINARY INJUNCTION

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Defendants’ deadline to file an opposition to Plaintiff’s motion for preliminary injunction. Id. at 6. 

The Court also set May 2, 2019 as the hearing on Plaintiff’s motion for preliminary injunction. See 

id. On April 25, 2019, Defendants filed their opposition to Plaintiff’s motion for preliminary 

injunction. ECF No. 21 (“Opp’n”). On April 29, 2019, Plaintiff filed its reply. ECF No. 23 

(“Reply”). 

Having considered the submissions of the parties, the relevant law, and the record in this 

case, the Court GRANTS Plaintiff’s motion for preliminary injunction.

I. BACKGROUND

The Perishable Agriculture Commodities Act (“PACA”), 7 U.S.C. § 499a et seq., protects 

sellers of perishable agricultural goods by requiring a merchant, dealer, or retailer of perishable 

produce to hold in trust proceeds from the sale of the perishable produce, and food derived from 

that produce, for the benefit of all unpaid suppliers. 7 U.S.C. § 499e(c)(2); Royal Foods Co., Inc. 

v. RJR Holdings, Inc., 252 F.3d 1102, 1104–05 (9th Cir. 2001). District courts have jurisdiction 

over actions brought by trust beneficiaries to enforce payment from a trust, 7 U.S.C. § 499e(c)(5), 

including actions to enjoin dissipation of trust assets. Frio Ice, S.A. v. Sunfruit, Inc., 918 F.2d 154, 

157–58 (11th Cir. 1990).

Plaintiff is a PACA licensee that has sold perishable agricultural commodities to 

Defendant. ECF No. 1 (“Compl.”) ¶¶ 3, 5. Plaintiff sold several shipments of produce to 

Defendant resulting in approximately $41,441.50 in overdue invoices. See ECF No. 3-2 (“Niles 

Decl.”) ¶ 3. Plaintiff contends that Defendant “failed to pay the invoices within the agreed 

payment terms and the cumulative amount of $35,253.00 remains overdue and unpaid.” ECF No. 

3-3 (“Cunningham Decl.”) ¶ 9.

Plaintiff contends that since September 2018, Plaintiff’s sales representative, Kenneth 

Cunningham (“Cunningham”), contacted Defendant Golden Rule through Louis Chavez, Jimmy 

Tsigaris, and “Peter,” regarding Defendant Golden Rule’s non-payment of Plaintiff’s invoices. Id. 

¶¶ 12–13. According to Cunningham, “[e]ach time I spoke with either [Louis Chavez, Jimmy 

Tsigaris or Peter], they promised to send a check, but, other than a check for $3688.50 received in 

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Case No. 19-CV-01964-LHK 

ORDER GRANTING MOTION FOR PRELIMINARY INJUNCTION

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mid-January and another for $2500 received in early February, [Plaintiff] never received any other 

payments from Golden Rule and $35,253.00 remains unpaid.” Id. ¶ 14. Since early February 2019, 

Cunningham has placed telephone calls every two weeks to Defendant Golden Rule seeking 

payment. Id. ¶ 15. Plaintiff’s counsel, Jennifer Niles (“Niles”), also contacted Defendant Golden 

Rule in January and February 2019 regarding Defendant’s failure to pay Plaintiff’s invoices. See 

Niles Decl. ¶¶ 3–8. 

Plaintiff believes that Defendant Golden Rule has failed to maintain sufficient trust assets 

to satisfy its PACA trust obligations to Plaintiff and that Defendant is dissipating assets covered 

by the trust provisions of the PACA. Cunningham Decl. ¶¶ 16–17 (“Based on these facts and my 

personal experience in the produce industry, I believe that Golden Rule has failed to maintain 

sufficient trust assets . . . and have dissipated and will continue to dissipate trust assets belonging 

to [Plaintiff].”). Plaintiff therefore seeks to enjoin Defendants from “using, consuming, or 

otherwise dissipating PACA trust assets, or making payment of any PACA trust asset to any 

creditor, person, or entity until further order of this Court, payment to Ratto Bros., or Ratto Bros. 

agreement.” See ECF No. 3-1 (“Mem.”) at 2. Plaintiff contends that it is likely to prevail on the 

merits because Defendants have not paid for the produce they received under PACA; that 

dissipation of PACA trust assets constitutes irreparable harm; and that the balance of equities tip 

in Plaintiff’s favor and that an injunction is in the public interest. See Mem.

II. LEGAL STANDARD

A plaintiff seeking a preliminary injunction must make a four-fold showing: (1) that he is 

likely to succeed on the merits; (2) that he is likely to suffer irreparable harm in the absence of 

preliminary relief; (3) that the balance of equities tips in his favor; and (4) that an injunction is in 

the public interest. Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7 (2008); Amer. Trucking 

Assocs., Inc. v. City of Los Angeles, 559 F.3d 1046, 1052 (9th Cir. 2009).

Moreover, the party seeking the injunction bears the burden of proving these elements. 

Klein v. City of San Clemente, 584 F.3d 1196, 1201 (9th Cir. 2009). “A preliminary injunction is 

‘an extraordinary and drastic remedy, one that should not be granted unless the movant, by a clear 

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ORDER GRANTING MOTION FOR PRELIMINARY INJUNCTION

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showing, carries the burden of persuasion.’” Lopez v. Brewer, 680 F.3d 1068, 1072 (9th Cir. 2012) 

(citation omitted) (emphasis in original).

III. DISCUSSION

Plaintiff argues that it meets all requirements for a preliminary injunction and that no bond 

should be required. See Mot. & Mem. 

Defendants’ opposition consists of a few paragraphs that primarily state the standard for a 

preliminary injunction. See Opp’n. Defendants’ only substantive arguments are that: (1) if 

Defendants are permitted to continue operations, they can pay Plaintiff within weeks; (2) if an 

injunction is granted, Defendants will not have the ability to pay their debt to Plaintiff; (3) there is 

no harm to Plaintiff in waiting; and (4) an injunction would cause harm to both parties. Id. at 2.

In addition, Defendant Tsigaris, Chief Executive Officer of Co-Defendant Golden Rule

Produce, Inc., represents that Defendants on April 25, 2019, made a payment of $6,000 to Plaintiff

and that Defendant Golden Rule “intends to continue making payments as agreed.” ECF No. 21-1 

(“Tsigaris Decl.”) ¶ 4.

Plaintiff’s reply acknowledges receipt of Defendants’ $6,000 payment but does not know if 

the check will clear. Reply at 2. Moreover, Plaintiff notes that Defendants sent the $6,000 payment 

on April 25, 2019, the date Defendants filed their opposition to Plaintiff’s instant motion for 

preliminary injunction. Reply at 2.

For the reasons given below, the Court finds that Plaintiff is entitled to a preliminary 

injunction and GRANTS Plaintiff’s motion for preliminary injunction.

First, Plaintiff has demonstrated a likelihood of success. Defendant does not contest that 

Plaintiff has demonstrated a likelihood of success. See Opp’n. Plaintiff is a PACA licensee that 

has sold perishable agricultural commodities to Defendant, who is also licensed under the PACA. 

Compl. ¶¶ 3–5; 7 U.S.C. §§ 499a-t. Plaintiff sold several shipments of produce to Defendant 

resulting in approximately $41,441.50 in overdue invoices. See Niles Decl. ¶ 3. Plaintiff preserved 

its rights against Defendant Golden Rule as a trust beneficiary under the PACA. Cunningham 

Decl. ¶ 10. Plaintiff tried on numerous occasions to collect payment for the overdue invoices owed 

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by Defendant Golden Rule. Id. ¶¶ 11–15. Finally, Defendant “failed to pay the invoices within the 

agreed payment terms and the cumulative amount of $35,253.00 remains overdue and unpaid.” Id.

¶ 9. See, e.g., Henry Avocado Corp. v. Golden Rule Produce, Inc., et al, Case No. 5:19-CV005810-EJD, Dkt. No. 11 (N.D. Cal. Feb. 1, 2019) (finding likelihood of success because the 

plaintiff, CustomRipe “(1) is a produce dealer subject to [PACA], 7 U.S.C. §§ 499a-t; (2) 

preserved its rights against Golden Rule as a trust beneficiary under PACA; and (3) has not been 

paid for perishable agricultural commodities it sold to Golden Rule totaling $53,806.00 as required

by PACA.”). Accordingly, Plaintiff has demonstrated a likelihood of success under the PACA. 

Second, Plaintiff has demonstrated a likelihood of irreparable harm absent injunctive relief. 

Plaintiff has presented evidence that Defendant Golden Rule is in financial jeopardy, has either 

dissipated or threatened to dissipate the trust assets subject to the PACA, 7 U.S.C. § 499e(c)(2), 

and may not be in a position to pay Plaintiff’s PACA trust claim. Specifically, Plaintiff has 

submitted evidence that despite the fact that Defendant Golden Rule owes Plaintiff and promised 

to send checks every week, Plaintiff only received two checks since early January 2019: one for 

$3,688.50 received in mid-January and another for $2,500 received in early February, and that 

$35,253 remains unpaid. Niles Decl. ¶¶ 4–5, 7–8. Although Defendants now represent that an 

additional payment of $6,000 was made on April 25, 2019 (the date Defendants filed their 

opposition to the instant motion for preliminary injunction), Plaintiff does not know whether this 

check will clear. See Tsigaris Decl. ¶ 4; Reply at 2. If the check does clear, then Defendants would 

still owe Plaintiff $29,253. Further, Defendants do not explain how a preliminary injunction would 

prevent them from continuing operations or how a preliminary injunction would “cause harm to 

both parties.” See Opp’n at 2. Moreover, Plaintiff presented evidence that Defendants dissipated 

trust assets through settlement of another lawsuit that was filed in the Northern District of 

California. See Henry Avocado Corp., Case No. 19-CV-005810-EJD (filed February 1, 2019, 

settled February 11, 2019, and dismissed on April 2, 2019). On April 4, 2019, Case No. 5:19-CV1826-NC, was filed in this court for non-payment against Defendants by another apparent PACA

creditor.

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Further, courts have recognized that dissipation of PACA trust assets constitutes 

irreparable harm. See, e.g., Henry Avocado Corp., Case No. 19-CV-005810-EJD, Dkt. No. 11 

(“[T]he Court concludes that CustomRipe will suffer immediate and irreparable injury due to 

Golden Rule’s dissipation of CustomRipe’s beneficial interest in the statutory trust created under 

PACA, 7 U.S.C. § 499e(c), and that this dissipation will continue in the absence of injunctive 

relief.”); Tanimura & Antle, Inc. v. Packed Fresh Produce, Inc., 222 F.3d 132, 140 (3d Cir. 2000)

(finding that PACA trust dissipation constitutes irreparable harm); Inn Foods Inc. v. Turner Mead 

LLC, No. C 07–00649, 2007 WL 484781 (N.D. Cal. Feb. 9, 2007) (“[I]t appears Plaintiff will 

suffer immediate and irreparable injury due to said Defendant’s dissipation of Plaintiff’s 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.”). Indeed, courts in this district have even granted ex parte TROs 

upon a clear showing that notice will result in further dissipation of trust assets. See, e.g., Chong’s 

Produce, Inc. v. Meshaal, No. C 09–4787, 2009 WL 3298175 (N.D. Cal. Oct. 9, 2009); Inn Foods 

Inc., 2007 WL 484781. Accordingly, the Court finds that Plaintiff has demonstrated irreparable 

harm.

Finally, the balance of equities and the public interest weigh in Plaintiff’s favor. In 

enacting the trust provisions of PACA, Congress sought to prevent the harm that occurs when 

dealers pay secured creditors from the proceeds of perishable agricultural commodities, leaving 

agricultural suppliers with no means of recovering payment. See 7 U.S.C. § 499e(c)(1) (“This 

subsection is intended to remedy such burden on commerce in perishable agricultural commodities 

and to protect the public interest.”); Middle Mountain Land and Produce Inc. v. Sound 

Commodities Inc., 307 F.3d 1220, 1223–24 (9th Cir. 2002) (“In response to this concern, Congress 

in 1984 broadened the scope of PACA to protect unpaid perishable agricultural commodities 

suppliers and sellers from business failures and reorganizations of buyers by enacting 7 U.S.C. § 

499e.”). The legislative history of PACA recognizes that once trust funds are dissipated, it is all 

but impossible to effect recovery. H.R.Rep. No. 98–543 (1983), reprinted in 1984 U.S.C.C.A.N. 

405, 411. Relying on the statutory purpose of the PACA, courts have regularly found that issuance 

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of a preliminary injunction in a PACA trust dissipation case is in the public interest. See, e.g.,

Tanimura, 222 F.3d at 140 (“Further, we find that issuance of a preliminary injunction here is in 

the public interest, as the statutory purpose explicitly encapsulates this.”); Frio Ice, S.A., 918 F.2d 

at 157–58 (“Congress recognized that dissipation of trust assets would undermine PACA and 

made such dissipation a violation of the statute. 7 U.S.C.A. § 499b(4) (West Supp.1990). Thus, 

preventing dissipation of the trust is a key purpose of PACA.”). Accordingly, the Court finds that 

the balance of equities and the public interest weigh in Plaintiff’s favor.

IV. CONCLUSION

For the foregoing reasons, the Court GRANTS Plaintiff’s motion for preliminary 

injunction. The Court further ORDERS as follows:

(1) Defendant Golden Rule Produce, Inc. and its officers, agents, servants, employees, 

attorneys, subsidiaries, assigns, banking and financial institutions, and all persons in 

active concert or participation with Golden Rule Produce, Inc. (including CoDefendant Tsigaris) are enjoined and restrained from dissipating, paying, transferring, 

encumbering, assigning or selling any and all assets covered by or subject to the PACA 

trust provisions until further order of this Court.

(2) Under PACA, 7 U.S.C. §499e(c)(2), the assets subject to this order include all of 

Golden Rule’s assets, unless it or a third party can prove to this Court that a particular 

asset is not derived from perishable agricultural commodities, inventories of food, 

other products derived from perishable agricultural commodities, receivables or

proceeds from the sale of such commodities or products, or purchased with funds from 

a comingled account containing proceeds from the sale of such commodities or 

products. However, Golden Rule may sell perishable agricultural commodities or

products derived from perishable agricultural commodities for fair compensation, 

without right of set-off, on the condition that Golden Rule accounts for and maintain

the proceeds of any sale subject to this Order.

(3) Defendants shall serve a copy of this Order on all banking or financial institutions with 

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which it conducts business, or any person or entity who may be holding assets for or on 

its behalf.

(4) This Order is binding upon the parties to this action, banking and financial institutions, 

and all other persons or entities receiving actual notice of this Order by personal 

service, including email, facsimile transmission, priority mail, or Federal Express.

(5) The $29,253 in PACA Trust Assets belonging to Plaintiff Ratto Bros., Inc. and in

Defendant Golden Rule’s possession will serve as Plaintiff Ratto Bros., Inc.’s security 

for this injunction as required by FRCP 65(c).

(6) This preliminary injunction shall remain in effect until the conclusion of this case or 

further order of this Court, whichever occurs first. 

IT IS SO ORDERED.

Dated: April 29, 2019

______________________________________

LUCY H. KOH

United States District Judge

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