### The Honorable Howard F. Sachs, United States District * 

### Judge for the Western District of Missouri, sitting by designation. No. 95-3552

Midland Banana & Tomato * Company, Inc.; Robert S. * Heimann; Susan Heimann, * * Petitioners, * * * On Petition for Review * of a Decision of the v. * United States Department * of Agriculture * United States Department * of Agriculture, * * Respondent. *

Submitted: November 22, 1996 Filed: January 7, 1997

Before RIC HARD S. ARNOLD, Chief Judge, MAGILL, Circuit Judge, and SACHS, * District Judge.

SACHS, District Judge

This p etition for review stems from consolidated Department o f Agriculture disciplinary proceedings under the Perishable Agricultura l Com modities Act, 7 U.S.C. § 499a et seq. (PACA), as amended, in whic h petitioner Robert Hei mann was found to have committed repeated violations of the Act by failing to make full and prompt

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payment for purchases of agricultural commodities and by making false and misleading statements on a PACA application. H eimann asserts that he was deprived of due proce ss because the Department procedures were tainted by ir relevant, prejudicial evidence which biased the decisionmakers an d becaus e there was blanket adoption of adverse claims, unsupported b y evidence. We conclude that Heimann's contentio ns are lacking in support, and we affirm.

I. The Peris hable Agricultural Commodities Act was enacted to regulate the mar keting of fresh and frozen fruits and vegetables in interstat e
commerce. See H.R. Rep. No. 87-1546 (1962), reprinted in1962 U.S.C.C.A.N

. 2749. Under the Act, all commission merchants, dealers and brokers in the perish able commodities industry are required to be licensed by th e Department. 7 U.S.C. § 499c. All are subject to the Act, which declares certai n conduct by commission merchants, dealers and brokers to b e unlawful.
On August 25, 1993, the Director of the Fruit and Vegetable Division of the Agricultural M arketing Service, an agency within the Department of Agriculture, commence d a disciplinary proceeding against Royal Fruit Co., Inc. ( "Royal") for alleged willful, repeated and flagrant violations o f Section 2(4) of the Act, 7 U.S.C. § 499b(4), which makes it unlawful for any commission merchant, dealer or broker licensed under the Act to fail to make fu ll and prompt payment in connection with any transaction i n interstate commerce involving perishable agricul tural commodities. On the same day, the Director commenced a disciplinary proceeding against Midland Banana & Tomato Co., Inc. ("Midland"), alleging that Midland violate d Section 8(c) of the Act, 7 U.S.C. § 499h(c), which makes it unlawful for
a PACA license applicant to make any false or misleading statements in a license application. The complaints against both companies alleged that both e ntities were "alter egos" of Robert Heimann, making Heiman n individually responsible for the alleged violations.

### The Secretary has delegated final administrative authority 1 

### to the Judicial Officer to decide cases subject to 5 U.S.C. §§ 556 and 557. 7 C.F.R. § 2.35. Cali's role at Royal is referred to in related litigation. 2 

### Conforti v. United States , 74 F.3d 838, 840-1 (8th Cir. 1996).
3 The Royal and Midland cases were consolidated and on July 26, 1994, fol lowing a hearing, an administrative law judge (ALJ) found that Roya l committed willful, flagrant, and repeated violat ions of the Act by failing to make full and prompt payment of over $500,000 ; that Royal was the alter ego of Heimann; that Midland had violated the Act by making false an d mislead ing statements in its application for a PACA license; and tha t Midland was Heimann's alter ego.

Heimann ( the only party now before us) appealed to the Department's Judicial Officer, challenging the alter ego determinations inboth cases. 1 On August 16, 1995, in a lengthy and thorough opinion, Judicial Office r Donald A. Campbell ad opted, with modifications, the ALJ's decision. This appeal followed.

II. In 1988, Robert Heimann purchased Ro yal, then a sole proprietorship, in an agreement that provided for Jeffrey Heimann, Robert's son, and Josep h Cali to ma nage the business. Robert Heimann and his wife Beverly signed 2 the contract for Royal's sale as purchasers. T here is no evidence Robert Heimann ever gave or sold the business to Jeffrey Heimann or Joseph Cali.
Royal was licensed by PACA, however, as a partnership whose partners
were identified as Joseph Cali, Jeffrey Heimann and Beverly Heimann. On November 21, 1988, Royal was incorporated and issued a new PACA licens e reflec ting its corporate status. The listed directors, officers an d shareholders were Cal i, Jeffrey Heimann and Beverly Heimann. The license was terminated on

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December 1, 1992, due to Royal's failure to pay the required annual renewa l fee.
In May 1989, Robert Heimann became a consultant for Royal. Hei mann's $10,000 per month fee was paid to Continental Oil & Gas Corp. ("Continental"), a non-operatin g entity Robert Heimann owned. After Robert Heimann formal lyjoined the firm, Royal's business increased substantially. I n December 1989, Royal purchased a new, larger loc ation. The funds for this purchase and for improvements to the property were provided through a Smal l Business Administration loan secured by a mortgage on Robert and Beverly Heimann's personal residence. The lenders took Robert Heimann's managemen t experience into account when deciding to approve the loan.

Robert Heimann was actively involved in Royal's management. H e negotiated the purchase and sale of produce and arranged for its transportation. He appeared, to individuals dealing with the company, to be the person in charge of Royal's operations. Royal carried a "key man" lif e insurance policy on Robert Heimann and not on any other Royal employees.

When Royal began experiencing financial difficulties at the end o f 1991, Robert Heimann allowed Royal to reduce his consulting fee to hel p keep the business solvent. During the first few months of 1992, Rober t Heimann, through chec ks from Continental, provided Royal with a number of shor t-term, interest-free loans to cover Royal's checking account whe n Royal needed to pay suppliers quickly.

Be tween July 1992 and November 1992, Royal failed to make promp t payment to 21 sellers for produce purchased in the amount of $500,370.54. Royal ceased operatio ns on November 17, 1992. That same day, Midland was incorporated. Midland's PACA license application identified Susan Heimann , Robert's daughter, aninexperienced college student, as its sole officer, director and

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shareh older. The funds used for Midland's initial capitalization cam e pri marilyfrom two of Robert Heimann's friends. Susan Heimann investe d $500 in t he firm. Robert Heimann served as general manager and wa s essentially responsible for all aspects of the operation.

Midland a nd Royal had almost identical operations. Midland had the
same address, telephone and facsimile numbers as Royal. It used Royal's office an d warehouse equipment. It had the same customers as Royal an d retained approximately one-third of Royal's employees.
Midland's PACA application asserted that Midland was not a successor to another firm. The Judicial Officer found, however, that Midland ha d succeeded Royal. He further found that Midland, in its application, had falsely denied that any employee had been the owner of a firm whose licens e is u nder suspension. The Judicial Officer found that the license o f Gilbert Brokerage Co. , a company Robert Heimann had owned and operated in the 197 0s, was under "ongoing suspension." He additionally found th e Midland application t o be misleading because it concealed the identity of the true principal of the firm, Robert Heimann.

In con cluding that Royal and Midland were alter egos of Rober t Heimann, the Judicial Officer considered the witnesses' credibility to be critical. He found t hat the testimony of Robert, his family members, and Joseph Cali, was not credible. In so finding, h e pointed to the fact that each of these individuals had misled authorities during the Department's investigation of the case. He concluded that Ro bert Heimann had the least credibility. To support this determination, he noted that Heimann ha d wal ked away from Gilbert Brokerage's disciplinary proceedings withou t producing required do cuments, had signed a number of fraudulent "State of Kansas Inspection Forms" while associated with another produce company , United KC, in the 1980s, and had structured a number of

### The contention is unsound. For example, there was a rejec- 3 

### tion of contention that Jeffrey B. Heimann was the alter ego of Midland and that the payment of bills through Continental amounted to check-kiting.
6 transactions in a misleading manner, apparently in order to avoid financia l responsibility. The Judicial Officer also found that Heimann's malfeasanc e prior to his involvement with Royal and Midland was relevant to th e proceedings because i t provided a motive for Heimann to disguise his true role in Royal's and Midland's operations.
Heimann asserts that consideration of these misdeeds was improp er and tainted the opinions so that the ALJ and Judicial Officer were no longer neutra l, unbiased decisionmakers. In support of this claim, Heiman n contends the Judicial Officer uniformly credited the Agricultural Marketin g Service position, even where the Department's findings were, he alleges, unsupp orted by or inconsistent with the evidence. As a result, Heiman n 3 argues, he was not afforded the fundamental due process to which he i s entitled.

III. We review federal constitutional questions de novo. United State s
v. Bates , 77 F.3d 1101, 1104 (8th Cir. 1996). Our determination is limite d to whether introduction of the allegedly irrelev ant evidence so prejudiced the Secretary that Heimann was denied the fundam ental fairness required in administrative hearin gs by the due process clause of the Fifth Amendment. See Beef Nebraska, Inc. v. United States , 807 F.2d 712, 719 (8th Cir

. 1986), quoting Silverman v. Commodity Futures Tr ading Commission , 549 F.2d 28, 33 (7th Cir. 1977).

Thi s court has recognized the right to "a fair, unbiased, an d im partial" administrative hearing. Local No. 3, United Packinghous e Workers v. NLRB , 210 F.2d 325, 330 (8th Cir. 1954), cert.

### Occasional wording in the 122-page opinion that suggests 4 

### irritation was fairly induced by the evidence.
7 denied , 348 U.S. 822 (1954). Hei mann considerably overplays his hand by suggesting that any uniform adoption of one party's proposed findings sign ifies "bias" and supports a conclusion that there has been a du e process vi olation. Heimann's argument relies on NLRB v. Miami Coca-Cola 4 Bottling Co. , 222 F.2d 341, 345 (5th Cir. 1955), in which the court stated that such a practice by a trial judge or hearing examiner "deprives hi s credibility findings of the weight usually afforded them." We agree that signs of superficial analysis invite closer scrutiny of the proceeding s below; but this does not routinely or usually result in a reversal, much less a conclusion that there has been a violation of constitutionall y mandated procedures.

There are occasions when the correct result is so obvious that a trial judge or hearing examiner may be less than completely thorough i n express analysis. As we have observed, this did not occur here.
We are not compelled by petitioner's briefing to address whether the challenged evidence was properly admitted. Heimann simply assumes, withou t ci tation, that the evidence was inadmissible. Additionally, becaus e Heimann's sole argument on appeal is that he was denied due process, w e need not analyze the Secretary's findings under the "substantial evidence" test. We note, however, that we are satisfied the Secretary's decision wa s well supported by substantial evidence and belie ve the challenged evidence was admissible, at least to show motivation. Fed. R. Evid. 404(b).

While it is thus not necessary to determine whether the proceedings before the Department were error-free, we note that the Departmen t successfully responds to two claims of error that are emphasized before us

. With respect to whether Heimann was still

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under a cloud because of the Gilbert Brokerage affair in the 1970s, h e cont ends there was a two-year limit on the suspension because of th e failure to pay suppliers. The Department contends, however, that there wa s
an "ongoing suspension" pursuant to 7 U.S.C. § 499m(b) (last sentence ) because Heimann never produced that company's records, and that such a suspension remains until and unless the records are produced. As th e Jud icial Officer concluded, Heimann had "good reason to worry" that th e Gilbert Brokerage exp erience would prejudice a new application in his own
name.
With respect to his personal falsification of inspection certif icates during th e United KC activities, proof of such conduct was made in thi s case and Heimann simply declined to meet the iss ue, although he could have done so without waiving his claim of irrelevance.
Nothing has been presented that woul d approach a denial of Heimann's right to due process.
Accordingly, we affirm the decision of the Secretary.

Affirmed.

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.