### I N THE UNI TED STATES COURT OF APPEALS FOR THE FI F TH CI RCUI T

No. 12-60816 Summary Calendar

MEZA SIERRA ENTERPRISES, INCORPORATED,
Petitioner
v. DEPARTMENT OF AGRICULTURE, Respondent

Petition for Review of an Order of the Department of Agriculture

D-10-0250

Before REAVLEY, JOLLY, and DAVIS, Circuit Judges. PER CURIAM: * Respondent Secretary of Agriculture ( “t h e S e c r e tary”) moved to revoke the perishable commodities m e r chant license of Petitioner Meza S ierra Enterprises, Inc. ( “ M e za Sierra”) for its willful, flagrant, and repeated f ailure to pay for perishable agricultural c o m m odities purchased in interstate commerce. The Administrative L a w Judge (“ALJ”) found that it possessed subject matter jurisdiction to adjudicate the d ispute and that it was proper for it to take official U n i t e d S t a te s C o u rt o f A p p e al s

F i f t h C i rc u i t 

### F I L E D June 20, 2013 Ly l e W . Cay ce Clerk

* Purs uant to 5 T H C I R

. R. 47. 5, the court has determ ined that this op inion s hould not be p ublis hed and is not p reced ent excep t und er the lim ited circum s tances s et forth in 5 T H C I R

. R. 47. 5. 4. Case: 12-60816 Document: 00512281959 Page: 1 Date Filed: 06/20/2013No. 12-60816

notice of th e f

a c ts f ound in a parallel T exas state court proceeding, and accordi n g l y revoked Meza Sierra’s l icense. Finding no error, we D ENY the petition for review. I. This appeal stems from the alleged f ailure of Meza Sierra to pay Kingdom Fresh Produce, Inc. (“Kingdom Fresh”) $215,385 for tomatoes it purchased and received between November 2008 and January 2009. Meza Sierra is a T exas corporation l icensed by the Depar t m ent of Agriculture to participate in the wholesale market for perishable a gricultural commodities under the Perishable Agricultural Commodities Act (“PACA”). 7 U.S.C. §§ 499a-499s. From N ovember to December of 2008, Meza S ierra placed

a series of orders—twe l v e lots in total—for tomatoes from Kingdom F resh, which Kingdom Fresh successfully delivered in accordan c e w i t h t h e t e r m s o f t h e orders. Kingdom Fresh, however, alleged t hat Meza Sierra never paid for any o f the delivered lots and filed suit against Meza S ierra f or b reach of contract i n Texas state court. The Deputy Administrator, 1 acting on behalf of the Secretary, also filed an administrative c omplaint alleging t h at Meza Sierra f ailed to pay Kingdom Fresh for the twelve lots of tomatoes in violation of 7 U.S.C. § 499b(4). 2 Under the authority of 7 U.S.C. § 499h(a), the D eputy Administrator petitioned the A LJ to permanently revoke Meza S i e r r a’s license f or its flagrant and repeated PACA violations.

1 D ep uty Ad m inis trator, Fruit and Vegetable Program s, Agricultural M ark eting Service, U nited States D ep artm ent of Agriculture

2 The D ep uty A d m inis trator als o alleged Meza Sierra f ailed to p ay a sep arate grow er, G rand Prod uce LTD Co. T he ALJ ultim ately dis m is s ed the claim pertaining to G rand Prod uce LTD Co. w ith prejud ice. 2 Case: 12-60816 Document: 00512281959 Page: 2 Date Filed: 06/20/2013No. 12-60816

In lieu o f a hearing, the ALJ took official notice o f r e c o r d s from the suit between Meza Sierra and King d o m F r e s h in T e xas state court. 3 From these records, the ALJ de t e r mined that (a) the tomatoes at i ssue in t he Texas state court proceeding were the s ame tomatoes a t issue in the Deputy A dministrator’s complaint, (b) the Texas s tate court suit was fully litigated, and (c) Meza Sierra had in fact failed to pay Kingdom Fresh the agreed purchase price of $215,385 for t he twelve lots of t o m a t o e s i t received. The ALJ ruled that Meza Sierra’s failure to pay Kingdom Fresh constituted repeated a nd flagrant violations of 7 U.S.C. § 499b(4) a nd ordered the permanent revocation of Meza Sierra’s PACA license. Meza Sierra a ppealed this r uling t o the S ecretary. The Judicial Officer (“JO”), acting o n behalf of the Secretary, affirmed the ALJ’s order revoking Meza Sier r a ’ s l icense. 4 The JO rejected Meza Sierra’s claims that the ALJ lacked jurisdiction to a djudicate this case and that the ALJ improperly took official notice o f the p roce e d i n g s in Texas state court. Meza Sierra now petitions this court to review that judgment. II. Ou r r eview of the Department of Agriculture’s decision u nder PACA is limited to the question of whether i t was “arbitrary, c a p r i c i o u s , or an a buse of discretion.” Faour v . U .S. Dep’t of Agric. , 9 85 F.2d 217, 219 (5th Cir. 1 993)(citing 5 U.S.C. § 706(2)(A)). We w ill also uphold an agency’s interpretation of its own regulations unless it is “plainly erroneous or inconsistent with the regulation.” Auer v. Robbins , 519 U .S. 452, 461 (1997) (quoting Robertson v. Methow Valley Citizens Council , 490 U.S. 332, 359 (1989)). III.

3 Caus e N o. C- 1990- 09A in the D is trict Court, 92nd Jud icial D is trict, H id algo County.

4 The JO vacated the ALJ’s alternative s anction, w hich ord ered the p ublication of the events s urround ing M eza Sierra’s PACA violation, becaus e the D ep uty A d m inis trator d id not s eek this s anction in its com p laint. 3 Case: 12-60816 Document: 00512281959 Page: 3 Date Filed: 06/20/2013No. 12-60816 A. Meza Sierra first argues that the ALJ lacked jurisdictio n t o a d j udicate this

case because the Department of Agricul t ure’s Rules of Practice Governing Formal Adjudicatory Proceedings (“Rules of Practice”) were i napplicable to the Deputy Administrator’s complaint. See 7 C.F.R. §§ 1.130-1.151. The Rules of Practice comprise the procedural rules governing an adjudicative proceeding i nstituted by t h e Secretary a nd include the rules of procedure be f

o re an ALJ. Id. According to § 1.131(a) o f the Rules of Practice, however, the r ules only a pply to a PACA adjudicatory proceeding if the Deputy Administrator brings the proceeding under the f ollowing ex clusive list of statutes: 7 U.S.C. § § 499a(b)(9), 499c(c), 499d ( d ) , 499f(c), 499h(a), 499h(b), 499h(c), 499h(e), 4 99i, and 499m(a). Meza Sierra contends that because the only provision of PACA which it allegedly violated, § 499b(4), is n o t l i s t e d in § 1.131(a) of the R u l e s o f P r a ctice, the Rules o f Practice a re inapplicable to this

case. This argumen t i gnores the structure of PACA’s administrative enforcement scheme. As the Deputy Administrator’s complaint makes clear, it is moving t o revoke Meza S i erra’s license “pursuant t o s ection 8(a) o f the PACA (7 U.S.C. § 499h(a)),” a statute which § 1.131(a) of the Rules of P ractice e xplicitly enumerates and und e r w hich a violation o f § 499b is an e lement. Section 499h(a) provides in pertinent part, Whenever

. . . the Secretary determines, as p rovided in section 499f o f this t itle, that any commission merchant, dealer, or brok e r h a s violated any of the provisions of section 499b of t h i s t itle

. . . t h e Secretary may . . . by order, revoke the license of the offender. 7 U.S.C. § 499h(a). A vio l a t i o n of § 499b is thus a p rerequisite to license r e vocation under § 499h(a). However, if the ALJ were not empowered to adjudicate violations of § 499b, then it could never revoke a license under § 499h(a). We d ecline to adopt

4 Case: 12-60816 Document: 00512281959 Page: 4 Date Filed: 06/20/2013No. 12-60816

an interpretation of the Rules of Practice that would render o ne o f i ts provisions void. 5 The Deputy Administrator’s complaint asserts t hat Meza Sierra violated § 499b(4) by f

ailing to p ay Kingdom F resh f o r twelve lots o f tomatoes, 6 and unambiguously petitions the ALJ to revoke Meza Sierra’s PACA license for its vi o l a t i o n s pursuant to § 499h(a). Because § 1.131(a) o f the Rules o f Practice identifies § 499h(a) in its l ist of applicable s tatutes, the Rules of Practice apply to this case. Meza Sierra in turn submits that the Deputy Administrator’s reliance on §499h(a) was premature. Specifically, Meza S i e rra argues that § 499h(a) only grants th e A L J t h e p ower to revoke a license after there has b een a separate administrative det e r m i n a t i on that a person has violated § 499b. Thus, Meza Sierra contends that i nvoking § 499h(a) i n t he initial complaint effectively presumed a § 499b determination which had not yet occurred. This argument, t hough artful, misconstrues t h e wording of t he statute. Section 499h(a) states only that “Whenever

. . . the Secretary dete r mines

. . . that any commission me r c h a nt, dealer, or broker has violated any of the provisions of section 499b . . . , the S ecretary may, b y order, revoke t he license of the offender.” Nothing in this lang u age supports a requirement that there must be some separate A LJ or administrative determination of § 499b liability before t he Secretary c an file a formal compla i n t t o revoke a merchant’s PACA license. While a f

inding o f § 499b liability is a prerequisite to final revocation of

5 See Corl ey v . U

ni ted Sta tes , 556 U

. S. 303, 315 ( 2009) (f ind ing that “one of the m os t bas ic interp retive canons [ is ] that a s tatute s hould be cons trued s o that ef f ect is given to all its p rovis ions , s o that n o p a r t w ill be inop erative or s up erf luous , void or ins ignif icant. ” ( internal quotation m ark s om itted ) )

.

6 Section 4 9 9 b ( 4 ) m a k e s it illegal to “f ail or ref us e truly and correctly to account and
m ak e f ull p aym ent p rom p tly in res p ect of any trans action in any s uch com m od ity to the p ers on w ith w hom s uch trans action is had

. ” 7 U

. S. C. § 499b( 4)

. U nd er 7 C. F. R. §46. 2( aa) ( 11) , a buyer f ails to m ak e “f

ull p aym ent p rom p tly” if it has not p aid the grow er w ithin the tim e ind icated by a w ritten agreem ent betw een the p arties

. 5 Case: 12-60816 Document: 00512281959 Page: 5 Date Filed: 06/20/2013No. 12-60816

a license under § 499h(a), it is not a prerequisite to the m e r e i n stitution of license revocation p r o c e e d ings. The A LJ’s d ecision to r evoke Meza Sierra’s license under § 499h(a) was therefore proper. 7 B. Meza S i erra next argue s t h a t t he A L J improperly took official notice of documents f

r o m t h e state c ourt suit before the Texas D istrict Court, 92nd Judicial District, and the Court of Appeals, 13th District of Texas. Those documents establish t hat Kingdom Fresh obtained a judgment for the purchase price of $215,385 for tomatoes which Meza S i erra had purchased but failed to pay Kingdom Fresh. Meza Sierra alleges, h o wever , t h a t t here has not been a final judgment in this s u it and consequently i t w as i mproper for the A LJ to take official notice of any documents stemming from the suit. 8 Meza Sierra’s contention hinges o n what it alleges to be a p ost-judgment order issued by the Texas state court vacating i ts judgment against Meza Sierra.

7 Meza Sierra als o argues that t h e S e cretary f ailed to mak e its d eterm ination in accord ance w ith § 499f, as required by § 499h( a) , becaus e K ingd om Fres h as the injured p arty n e v er f iled a f orm al com p laint. H ow ever, § 499f requires the injured third party to f i l e a com p laint w ithin nine months only if the injured p arty wants to initiate a rep aration p r o c e ed ing, i. e. , f

ile a f ed eral PACA claim to com pel the d elinquent p arty to p ay f or th e d elivered agriculture good s . See 7 U

. S. C. § 499f( a) ( 1) (“ A ny pers on com p laining of any violation of any p rovis ion of s ection 499b of this title

. . . at any tim e w ithin nine m onths af ter the caus e of action accrues [ m ay petiti o n t h e S e c retary to file a com p laint]

. ”) ( em p has is ad d ed ) ; Fi ner Foods Sa l es Co. v . B l ock , 708 F .2d 774, 780–81 (D .C. C ir. 1983) ( conclud ing that 7 U

. S. C. §499f d oes not require the injured p arty to f ile a com p laint unles s it choos es to initiate rep aration p roceed ings ). But this is not a rep aration p rocee d i n g b e c a us e K ingd om Fres h s ought p ecuniary relief in s tate court and the Secretary s eek s here only to revok e M eza Sierra’s PACA licens e. See a l so M

el v in Beene Produce C o. v . A gri c. M ktg. Serv

. , 728 F. 2d 347, 349 ( 6th Cir. 1984) ( “We f ind that the nine- m onth lim it ap plies only to rep arations actions

. . . not d is cip linary actions by the Secretary. ”)

.

8 An ALJ m ay tak e of

f icial notice of “s uch m atters as are j ud icially noticed by the courts of the U nited States and of any m atter of technical, s cientif ic, or com m ercial f

act of es tablis hed character. ” 7 C. F. R. § 1. 141( h) ( 6)

. M eza Sierra d oes not contes t w hether § 1. 141( h) ( 6) p rovid ed the A LJ w ith suf

f icient authority to tak e o f f i c i a l notice of record s from a state court p roceed ing.

6 Case: 12-60816 Document: 00512281959 Page: 6 Date Filed: 06/20/2013No. 12-60816

Responding to M e z a Sierra’s Motion to Reconsider the c o urt’s summary judgment in favor of Kingdom Fresh, t he c ourt issued an order on May 18, 2010, which, due to handwritten alterations to the order, a ppeared to simultaneously both g rant and deny the Motion to R econsider. Meza Sierra has interpreted this conflicting order as an abatement of the summary j udgmen t t hat r endered all subsequent decisions in Texas state court a legal nullity. The full record belies this contention. O n April 19, 2010, t he 92nd Texas Judicial District i ssued a F inal Summary Judgment in favor of Kingdom Fresh. Though the same court’s May 18, 2 010 ruling on Meza Sie r r a ’ s Motion to Reconsider the s ummary judgment was indeed ambiguous, a May 28, 2010 order clarified the May 1 8 r u l ing by unequivocally denying reconsideration of the
summary judgment. Though Meza Sierra moved to vacate t h e May 28, 2010 order, the court denied the m otion on September 1 5, 2 010, ruling that t he May 28, 2 010 motion should remain in full effect. Meza Sierra appealed the summary judgment, but t he Te x a s court of appeals dismissed t he appeal for untimely filing. Both the May 28, 2010 order and the September 1 5, 2010 order confirm that the ambiguous May 18, 2010 o rder denied, rather than g ranted, Meza Sierra’s motion to reconsider the summary judgment. W ith the t ri a l c ourt’s rulings unanimously i n fa v o r o f Kingdom Fresh, the T exas appellate court’s denial of Meza Sierra’s appeal means t hat the T exas s tate court suit of which the ALJ took notice was fully litigated and therefore the ALJ’s official n otice of facts in those proceedings was proper. IV. F o r the reasons more fully set forth above, the petition for review is DENIED.

7 Case: 12-60816 Document: 00512281959 Page: 7 Date Filed: 06/20/2013