Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-00-01163/USCOURTS-caDC-00-01163-0/pdf.json

Parties Involved:
PMD Produce Brokerage Corp.
Petitioner
United States Department of Agriculture
Respondent
United States of America
Respondent

Document Text:

<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 14, 2000 Decided December 19, 2000

No. 00-1163

PMD Produce Brokerage Corp.,

Petitioner

v.

United States Department of Agriculture and

United States of America,

Respondents

On Petition for Review of an Order of the

Department of Agriculture

Kevin P. Claffey argued the cause and filed the briefs for

petitioner. Paul T. Gentile entered an appearance.

M. Bradley Flynn, Attorney, U.S. Department of Agriculture, argued the cause for respondent. With him on the brief

were James Michael Kelly, Associate General Counsel, and

Margaret M. Breinholt, Acting Assistant General Counsel.

USCA Case #00-1163 Document #563576 Filed: 12/19/2000 Page 1 of 10
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

Before: Williams, Rogers and Tatel, Circuit Judges.

Opinion for the Court filed by Circuit Judge Rogers.

Rogers, Circuit Judge: PMD Produce Brokerage Corporation challenges the dismissal, as untimely, of its appeal of an

administrative law judge's decision that it violated the Perishable Agricultural Commodities Act, 7 U.S.C.

ss 499a-s ("PACA").1 PMD contends that the Secretary of

Agriculture's Rules of Practice Governing Formal Adjudicatory Proceedings, see 7 C.F.R. ss 1.142(c), 1.145(a) (2000), are

ambiguous regarding the time to appeal and, further, that it

reasonably relied on statements of the Administrative Law

Judge and the Hearing Clerk regarding the deadline for filing

an administrative appeal. Because ss 1.142(c) and 1.145(a)

are ambiguous, as confirmed by contrary interpretations

within the Department of Agriculture, we hold that the

Secretary did not give fair notice of his interpretation of

s 1.142(c)(2) as requiring an appeal to be filed within 30 days

of issuance of an administrative law judge's oral decision.

Accordingly, because the Secretary was arbitrary and capricious in dismissing PMD's appeal, we grant the petition.

I.

The Secretary, acting through the Associate Deputy Administrator, Fruit and Vegetable Programs, Agricultural

Marketing Service, filed an administrative complaint on November 16, 1998, alleging that PMD had violated s 2(4) of

PACA, 7 U.S.C. s 499b(4), by willfully failing repeatedly to

make full payment promptly to 18 sellers of 633 lots of

perishable agricultural commodities that it had purchased and

received. On November 12, 1999, the Department filed a

motion for a bench decision, a proposed findings of fact and

conclusions of law, and a proposed order, in accordance with

s 1.142(b) of the Secretary's Rules of Practice, 7 C.F.R.

s 1.142(b).2 After hearing testimony, the Administrative

__________

1 See In re PMD Brokerage Corp., PACA Docket No.

D-99-0004 (Dep't of Agric. March 31, 2000); In re PMD Brokerage

Corp., PACA Docket No. D-99-0004, 2000 WL 202696 (Dep't of

Agric. Feb. 18, 2000).

2 Section 1.142(b) provides, in relevant part:

Law Judge orally announced his decision. The Judge found

that PMD had violated PACA and recommended revocation

of PMD's license as a dealer and merchant of perishable

agricultural products under PACA, 7 U.S.C. ss 499c, 499h(a).

The Judge directed that his decision and order be published

pursuant to the Rules of Practice and stated: "This decision

will become final without further proceedings 35 days after

service of this decision, unless [PMD] appeals this decision,

pursuant to section 1.145 of the Rules of Practice (7 C.F.R.

s 1.145)." The Judge thereafter excerpted his oral decision

and filed the written excerpt on November 30, 1999.

By letter dated December 1, 1999 to PMD's counsel, the

Hearing Clerk enclosed "a copy of the Bench Decision, issued

... on November 30, 1999." The letter stated that "[e]ach

USCA Case #00-1163 Document #563576 Filed: 12/19/2000 Page 2 of 10
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

party has thirty (30) days from the service of this decision

and order in which to file an appeal to the Department's

Judicial Officer." The letter also instructed PMD "to consult

s 1.145 of the Uniform Rules of Practice (7 C.F.R. s 1.145)

for the procedure for filing an appeal."

On January 7, 2000, PMD filed with the Department's

Judicial Officer a petition seeking reversal of the Judge's

decision, and, alternatively, a new hearing. Following receipt

of the Department's response, the Judicial Officer denied

PMD's appeal for lack of jurisdiction. The Judicial Officer,

relying on ss 1.142(c)(2) & (4) of the Rules of Practice, found

that the Judge's oral decision was issued on November 17,

1999 and became effective 35 days thereafter, on December

22, 1999. Because PMD's appeal was not filed before the

decision became effective, the Judicial Officer ruled that he

lacked jurisdiction to hear the appeal, citing Department

precedent under the Rules of Practice.3 Because he lacked

__________

Prior to the Judge's decision, each party shall be afforded a

reasonable opportunity to submit for consideration proposed

findings of fact, conclusions, order, and brief in support thereof.

7 C.F.R. s 1.142(b) (2000).

3 The Judicial Officer noted that the Secretary's interpretation

of his Rules of Practice, treating time limits as jurisdictional, is

consistent with the judicial construction of Federal Rule of Appeljurisdiction to hear PMD's appeal, the Judicial Officer issued

an order that the Judge's oral decision of November 17, 1999

was the final administrative order. The Judicial Officer

denied PMD's petition for reconsideration.

II.

On appeal, PMD contends that the Secretary's Rules of

Practice, specifically ss 1.142(c)(4) and 1.145(a), are internally

inconsistent.4 The ambiguity arises, PMD maintains, because

the Rules of Practice do not indicate that "issuance" of an

oral decision under ss 1.142(c)(2) and (4) is to be considered

"receiving service" under s 1.145(a). PMD points out that

s 1.142(c)(4) provides that an oral decision becomes effective

35 days after issuance, while s 1.145(a) provides that a party

has 30 days after "receiving service" of the Judge's decision

to appeal. "Clearly," PMD contends, "receiving service of

the Judge's decision is a form of notice of entry requirement,

that requires serving a copy of the written decision on the

parties before the time to appeal begins to run." In addition,

PMD contends that it reasonably relied on the statements by

the Judge and the Hearing Clerk that the Judge's opinion did

not become effective until 35 days after service because they

would not intentionally misinform a party about the time to

appeal. The court reviews the Secretary's decision dismissing PMD's appeal to determine whether it was arbitrary,

capricious, an abuse of discretion, or otherwise not in accordance with law. See 5 U.S.C. s 706(2)(A).

__________

USCA Case #00-1163 Document #563576 Filed: 12/19/2000 Page 3 of 10
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

late Procedure 4(a)(1) and 4(a)(5)(A) and the Administrative Orders

Review Act, see 28 U.S.C. s 2344, as interpreted in Illinois Central

Gulf Railroad Co. v. ICC, 720 F.2d 958, 960 (7th Cir. 1983). See

Kidd v. District of Columbia, 206 F.3d 35, 38 (D.C. Cir. 2000);

Energy Probe v. United States Nuclear Regulatory Comm'n, 872

F.2d 436, 437 (D.C. Cir. 1989); see also Marine Mammal Conservancy, Inc. v. USDA, 134 F.3d 409, 410-11 (D.C. Cir. 1998).

4 Although PMD's brief refers to s 1.142(a)(4), there is no such

subsection and it is obvious that PMD intends to refer to

s 1.142(c)(4).

USCA Case #00-1163 Document #563576 Filed: 12/19/2000 Page 4 of 10
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

The Secretary states that he has consistently interpreted

the Rules of Practice to divest the Judicial Officer of jurisdiction to hear an appeal of an administrative law judge's

decision that has become effective. See, e.g., In re Toscony

Provision Co., 43 Agric. Dec. 1106, 1108-09 (Dep't of Agric.

1984) (order denying late appeal) and Department orders

cited. Further, he states that PMD had actual notice from

the Judge's oral ruling on November 17, 1999 that his decision would be final in 35 days unless an appeal was filed

pursuant to s 1.145. Having failed to file an appeal before

December 22, 1999, the Secretary maintains that PMD's

contention that the court should disregard the jurisdictional

nature of s 1.142(c)(4) is meritless. In other words, although

not expressly stated in his Rules of Practice, the Secretary

has interpreted "issuance" of an oral decision under

s 1.142(c)(4) to mean "receiving service" for purposes of

s 1.145(a).

The Secretary explains, in his brief on appeal, that the

bench decision procedures of s 1.142 are designed to allow

expedited proceedings in disciplinary cases where the violation is so patent that "the usual opportunity for the parties to

submit written findings of fact and conclusions of law is

unnecessary." Under these circumstances, the Secretary

contends, "[n]o good reasons exist for delaying the imposition

of the order of the [J]udge." Perhaps not. Indeed, on the

basis of this rationale, the court could readily view the

Secretary's interpretation of s 1.142(c)(4) as reasonable. Cf.

Veg-Mix, Inc. v. USDA, 832 F.2d 601, 608-09 (D.C. Cir.

1987). The question before the court, however, is not whether the Secretary's interpretation of the Rules of Practice is

reasonable, but whether the Secretary has given fair notice of

his interpretation that "issuance" of an oral opinion pursuant

to s 1.142(c)(2) is "receiving service" for purposes of taking

an appeal under s 1.145(a). See United States v. Chrysler

Corp., 158 F.3d 1350 (D.C. Cir. 1998); Rollins Envtl. Servs.

(NJ) Inc. v. EPA, 937 F.2d 649 (D.C. Cir. 1991); Gates & Fox

Co. v. Occupational Safety & Health Review Comm'n, 790

F.2d 154 (D.C. Cir. 1986).

USCA Case #00-1163 Document #563576 Filed: 12/19/2000 Page 5 of 10
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

The dismissal of PMD's appeal implicates the Secretary's

obligation to give fair notice because the sanction of dismissal

of its appeal petition as untimely forecloses relief from revocation of its license under PACA. In Satellite Broadcasting

Co. v. FCC, 824 F.2d 1 (D.C. Cir. 1987), the court explained:

Traditional concepts of due process incorporated into

administrative law preclude an agency from penalizing a

private party for violating a rule without first providing

adequate notice of the substance of the rule. The dismissal of an application, we have held, is a sufficiently

grave sanction to trigger this duty to provide clear

notice.

Id. at 3 (citations omitted). In that case, an applicant for

FCC licenses had failed to file its application in the proper

location. See id. at 2-3. The court observed that the rules,

taken as a whole, were conflicting. Id. at 2. Thus, while an

"agency's interpretation [of its own rule] is entitled to deference, [ ] if it wishes to use that interpretation to cut off a

party's right, it must give full notice of its interpretation."

Id. at 4. Because the FCC had not provided fair notice of its

interpretation of the relevant rules, the court held that it had

acted arbitrarily and capriciously in dismissing the license

applications, and that the applicant was entitled to reinstatement of the applications nunc pro tunc. See id.

Similarly, in General Electric Co. v. EPA, 53 F.3d 1324

(D.C. Cir. 1995), the court deferred to the agency's reasonable

interpretation of its rules but held that the agency could not

fine a private party for failure to comply with a rule interpretation that was "so far from a reasonable person's understanding of the regulations that [the regulations] could not

have fairly informed GE of the agency's perspective." Id. at

1330. Most recently, in Trinity Broadcasting of Florida, Inc.

v. FCC, 211 F.3d 618 (D.C. Cir. 2000), the court rejected the

agency's contention that its regulation requiring an entity to

be "minority-controlled," id. at 628, provided fair notice of its

interpretation of the regulation as mandating that non-profit

organizations demonstrate de facto minority control and not

simply a majority-minority board. See id. at 625, 628-30.

The court likewise rejected the agency's contentions that

agency statements and other agency action provided fair

notice of its interpretation. See id. at 628-31. Therefore, the

court reversed the denial of an application for renewal of a

broadcast license. See Trinity Broad., 211 F.3d at 632.

Here, the question is whether the Secretary's rules gave

PMD fair notice of the time within which it had to appeal the

Judge's decision.5 Two sections of the Secretary's Rules of

Practice are implicated. Section 1.142, addressing when an

Administrative Law Judge's decision becomes effective, provides in relevant part:

The Judge's decision shall become effective without further proceedings 35 days after the issuance of the decision, if announced orally at the hearing, or if the decision

is in writing, 35 days after the date of service thereof

upon the respondent, unless there is an appeal to the

Judicial Officer by a party to the proceeding pursuant to

USCA Case #00-1163 Document #563576 Filed: 12/19/2000 Page 6 of 10
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

s 1.145; Provided, however, that no decision shall be

final for purposes of judicial review except a final decision of the Judicial Officer upon appeal.

7 C.F.R. s 1.142(c)(4) (2000) (emphasis added).6 Section

1.145, addressing appeals, provides in relevant part:

__________

5 On appeal, the Secretary has abandoned the Judicial Officer's

alternative position, in denying reconsideration, that PMD's appeal

was untimely because it was filed 31 days after PMD was furnished

a copy of the Bench Decision by the Hearing Clerk. PMD claims

first, that it did not receive the Bench Decision until December 7,

1999, and second, that under agency precedent, the Judicial Officer

can grant an extension of time "if an appeal [i]s inadvertently filed

up to 4 days late, e.g., because of a delay in the mail system...."

In re Scamcorp, Inc., 55 Agric. Dec. 1395, 1996 WL 678862, at *6

(Dep't of Agric. Nov. 7, 1996); see also id. at *7.

6 Section 1.142 also provides:

If the [Administrative Law Judge's] decision is announced

orally, a copy thereof, excerpted from the transcript or recording, shall be furnished to the parties by the Hearing Clerk.

Irrespective of the date such copy is mailed, the issuance date

of the decision shall be the date the oral decision was announced.

7 C.F.R. s 1.142(c)(2) (2000).

Within 30 days after receiving service of the Judge's

decision, a party who disagrees with the decision, or any

part thereof, or any ruling by the Judge or any alleged

deprivation of rights, may appeal such decision to the

Judicial Officer by filing an appeal petition with the

Hearing Clerk.

7 C.F.R. s 1.145(a) (2000) (emphasis added).

As the Secretary points out, ss 1.142(c)(2) & (4) clearly

describe when a Judge's opinion, whether oral or written,

becomes effective. Similarly, s 1.145(a) clearly states there

is a 30-day period within which to appeal the Judge's decision. But the triggering event under s 1.145(a) is "receiving

service," and the Rules of Practice at no point state that

"issuance" of an oral opinion under s 1.142(c)(2) is deemed

"receiving service" for purposes of s 1.145(a). In other

words, the Secretary's Rules of Practice are silent regarding

whether "issuance" of an oral decision under s 1.142(c)(2) is

"receiving service" for purposes of noting an appeal under

s 1.145(a). Thus, PMD could not simply read the Rules of

Practice and know that this was so. Nor would the purpose

of expedition, which the Secretary asserts is the underlying

rationale for the procedures in s 1.142(c), compel an interpretation of the regulations, much less give fair notice, that

"issuance" is to be equated with "receiving service" under

s 1.145(a). Cf. Trinity Broad., 211 F.3d at 629-30. At oral

argument, the Secretary agreed that the period after which

an opinion becomes effective is different from the period in

which a party may note an appeal.

USCA Case #00-1163 Document #563576 Filed: 12/19/2000 Page 7 of 10
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

Of course, the Secretary may utilize means other than the

language of his Rules of Practice to give adequate notice of

his interpretation. See, e.g., General Elec., 53 F.3d at 1329.

However, the Secretary points to no action, such as public

statements or pre-enforcement efforts, that would have informed PMD of the Secretary's interpretation. Instead, the

statements by the Judge and the Hearing Clerk demonstrate

that the Rules of Practice were ambiguous regarding the time

USCA Case #00-1163 Document #563576 Filed: 12/19/2000 Page 8 of 10
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

period for appealing an oral bench decision. See id. at 1330-

32. Each statement erroneously referred to "service" as the

event triggering the 30-day appeal period and, consequently,

neither statement informed PMD that the appeal period had

been triggered by the Judge's oral issuance of his opinion on

November 17, 1999. Such statements, it could be argued,

justify application of a "unique circumstances" exception.

Prudential-Bache Sec., Inc. v. Fitch, 966 F.2d 981, 984-86

(5th Cir. 1992) (construing Fed. R. App. P. 4(a)); cf. Moore v.

South Carolina Labor Bd., 100 F.3d 162, 164 (D.C. Cir. 1996).

Under the unique circumstances doctrine, "appellate courts

will excuse an untimely notice of appeal where the appellant

could have filed a timely notice but was mislead to delay filing

by a court order or ruling which purportedly extended or

tolled the appeal deadline." Id. at 163.

In denying PMD's petition for reconsideration, the Judicial

Officer made three principal points. First, he noted that

PMD had been furnished with a copy of the Secretary's Rules

of Practice, which are also published in the Federal Register,

and that PMD's reliance on the statement of the Hearing

Clerk was "misplaced." Yet the Rules themselves were, at

best, unclear on the critical point for PMD. The lack of

clarity was exacerbated by the Judge's statement, which

appeared to be consistent with the statement of the Hearing

Clerk.

Second, the Judicial Officer emphasized that the only decision issued by the Judge was announced at the November 17,

1999 hearing. The written Bench Decision later received by

PMD was merely an excerpt from the transcript of the earlier

hearing. Hence, the Judicial Officer concluded that the reference to "this decision" in the Judge's Bench Decision furnished to PMD, as well as the references in the Hearing

Clerk's December 1, 1999 letter, were all references to the

oral decision issued on November 17, 1999. The Judicial

Officer also recognized, however, that the references to the

Judge's decision were "not without ambiguity." Further, the

fact that the only decision in the case was the Judge's oral

decision begs the question. The question is whether the

Rules of Practice, or other action by the Secretary, provided

USCA Case #00-1163 Document #563576 Filed: 12/19/2000 Page 9 of 10
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

fair notice of which event--"issuance" or "receiving service"--triggered the appeal time under s 1.145(a).

Third, the Judicial Officer found that the statements by the

Judge and the Hearing Clerk that the decision would become

effective 35 days after service, rather than after issuance,

were "error" because the only decision in the case was the

oral decision issued on November 17, 1999. Acknowledging

further that there was an ambiguity in the statements made

to PMD by the Judge and the Hearing Clerk because both

failed to distinguish between the November 17, 1999 oral

decision and the written Bench Decision when informing

PMD of the period to appeal, the Judicial Officer nevertheless

appeared to conclude that a simple reading of the Rules of

Practice sufficed to give fair notice to PMD. In that regard,

for reasons already discussed, he erred. Moreover, any

similarity between the Secretary's interpretation of s 1.145(a)

as a jurisdictional bar and judicial construction of Federal

Rule of Appellate Procedure 4 and the Administrative Orders

Review Act, 28 U.S.C. s 2344, as presenting jurisdictional

bars to untimely appeals, see supra n.3, does not address

whether the Secretary provided fair notice of his interpretation of s 1.142(c).

Accordingly, because neither the Secretary's Rules of Practice nor any other action by the Secretary provided fair notice

to PMD that "issuance" of the Judge's oral decision under

s 1.142(c) was "receiving service" for purposes of noting an

appeal under s 1.145(a), we grant the petition.

USCA Case #00-1163 Document #563576 Filed: 12/19/2000 Page 10 of 10