Source: https://law.justia.com/cases/federal/appellate-courts/F2/536/856/139532/
Timestamp: 2019-06-18 13:13:33
Document Index: 15268828

Matched Legal Cases: ['§ 499', '§ 499', '§ 499', '§ 499', '§ 499', '§ 499', '§ 499', '§ 499', '§ 499', '§ 499']

Leonard O'day, Dba Leonard O'day Company, Petitioner-appellant, v. George Arakelian Farms, Inc., a California Corporation,respondent-appellee,united States of America, Intervenor, 536 F.2d 856 (9th Cir. 1976) :: Justia
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Leonard O'day, Dba Leonard O'day Company, Petitioner-appellant, v. George Arakelian Farms, Inc., a California Corporation,respondent-appellee,united States of America, Intervenor, 536 F.2d 856 (9th Cir. 1976)
U.S. Court of Appeals for the Ninth Circuit - 536 F.2d 856 (9th Cir. 1976)
The principal purpose of the Perishable Agricultural Commodities Act is "to provide a practical remedy to small farmers and growers who were vulnerable to the sharp practices of financially irresponsible and unscrupulous brokers in perishable commodities." Chidsey v. Guerin, 443 F.2d 584, 587 (6th Cir. 1971).1 Accordingly, certain conduct by commission merchants, dealers, or brokers is declared to be unlawful. 7 U.S.C. § 499b. All commission merchants, dealers, and brokers are required to be licensed. Id. § 499c. Any person may complain to the Secretary of Agriculture of an alleged violation of the statutory code of conduct. Id. § 499f. If after notice and hearing or default the Secretary determines that the licensee has violated the statutory code, he may order the offender to make reparations to the complainant. Id. § 499g(a). The licensee may appeal to a federal district court, but the appeal is not effective unless the appellant files "a bond in double the amount of the reparation awarded against the appellant conditioned upon the payment of the judgment entered by the court, plus interest and costs, including a reasonable attorney's fee for the appellee, if the appellee shall prevail." Id. § 499g(c). If the licensee does not perfect an appeal from the reparations order, or pay it, his license is suspended for a period of either two or three years. Id. §§ 499g(d), 499d(b) (D) & (c).
Appellant's claim does not fall within the rationale of Boddie v. Connecticut, 401 U.S. 371, 91 S. Ct. 780, 28 L. Ed. 2d 113 (1971). Appellant was afforded a full and fair administrative hearing before the Secretary ordered him to pay appellee or suffer suspension of his license. He was represented by counsel and presented witnesses before a neutral hearing officer who issued a lengthy written opinion discussing the facts and applying the law. Appellant does not challenge the adequacy of this hearing. The double bond requirement may bar judicial review, but it does not exclude appellant "from the only forum effectively empowered to settle" his dispute. Boddie v. Connecticut, supra, 401 U.S. at 376, 91 S. Ct. at 785.3 See Ortwein v. Schwab, 410 U.S. 656, 658-60, 93 S. Ct. 1172, 35 L. Ed. 2d 572 (1973); Chidsey v. Guerin, supra, 443 F.2d at 588; cf. Bell v. Burson, 402 U.S. 535, 542-43, 91 S. Ct. 1586, 29 L. Ed. 2d 90 (1971); Goldberg v. Kelly, 397 U.S. 254, 266, 90 S. Ct. 1011, 25 L. Ed. 2d 287 (1970). Nor is the deprivation appellant faces of the same constitutional significance as the interest at stake in Boddie. See Chidsey v. Guerin, supra, 443 F.2d at 587; Zwick v. Freeman, 373 F.2d 110, 117-19 (2d Cir. 1967); cf. United States v. Kras, 409 U.S. 434, 444-45, 93 S. Ct. 631, 34 L. Ed. 2d 626 (1973); Ortwein v. Schwab, supra, 410 U.S. at 659, 93 S. Ct. 1172.
The rationale of Lindsey v. Normet, 405 U.S. 56, 92 S. Ct. 862, 31 L. Ed. 2d 36 (1972), however, entitles appellant to relief. The Court held that the Equal Protection clause was violated by a provision of the Oregon Forcible Entry and Wrongful Detainer Statute requiring a lessee who wished to appeal to file a bond for the payment of twice the rental value of the premises from the time the action was commenced until final judgment. "When an appeal is afforded," the Court said, "it cannot be granted to some litigants and capriciously or arbitrarily denied to others without violating the Equal Protection Clause." Id. at 77, 92 S. Ct. at 876. The Court noted "that the double-bond requirement heavily burdens the statutory right . . . to appeal." While the state could require adequate security to preserve an award already made and otherwise protect appellee against loss during appeal, the Court observed that the double bond requirement did not effectuate these purposes in the circumstances presented in Lindsey. Id. at 77-78, 92 S. Ct. 862. The claim that the double bond requirement screened out frivolous appeals was also "unpersuasive, for it not only bars nonfrivolous appeals by those who are unable to post the bond but also allows meritless appeals by others who can afford the bond." Id. at 78, 92 S. Ct. at 876.
Procedural provisions to protect litigated property and discourage unsubstantial appeals are valid, the Court said, if "reasonably tailored to achieve these ends and uniformly and nondiscriminatorily applied." But the state did not seek to protect the prior award. Instead, it "automatically doubled the stakes when a tenant seeks to appeal an adverse judgment . . . . Id. at 79, 92 S. Ct. at 877. This discriminated against those who could not post a double bond. " For them, as a practical matter, appeal is foreclosed, no matter how meritorious their case may be." Id. at 79, 92 S. Ct. at 877. Nonindigent lessees were also aggrieved for they were "confronted by a substantial barrier to appeal faced by no other civil litigant . . . ." This discrimination, the Court concluded, was "arbitrary and irrational," and therefore violated the Equal Protection Clause. Id. at 79, 92 S. Ct. at 877.
The Sixth Circuit also suggested that "the bond requirement serves to insure that licensees under the Act do not continue in business unless they are financially capable of satisfying their potential liabilities." Chidsey v. Guerin, supra, 443 F.2d at 588. This suggestion was drawn from Zwick v. Freeman, 373 F.2d 110, 117 (2d Cir. 1967). But Zwick was not concerned with the double bond requirement. The question before the court in Zwick was whether provisions of the Act, which bar persons "responsibly connected" with an offending licensee from obtaining employment from another licensee for a period of a year (7 U.S.C. § 499h(b)), were so inconsistent with the purpose of the Bankruptcy Act that bankrupts should be excluded from its application. The court said, "We cannot lightly infer that Congress intended to exempt bankrupts from being subject to these provisions of the Commodities Act when such an exemption would be extremely damaging to the goal of the Commodities Act that only financially responsible persons should be engaged in businesses subject to the Act." 373 F.2d at 117. The Court did not suggest that the double bond requirement had any such goal. The presence of other provisions specifically directed to assuring the financial responsibility of licensees8 argues against the conclusion that the double bond provision "could rationally have been intended to prevent those very same abuses." United States Department of Agriculture v. Moreno, supra, 413 U.S. at 537, 93 S. Ct. at 2827.
In certain respects, the double bond involved in Lindsey was less justifiable than the double bond involved in the present case. The Lindsey double bond was unnecessary to protect the appellee against the risk of loss because a general appeal bond was also required and other statutory remedies were available to protect the appellee from loss of rent or waste or damage to the property. 405 U.S. at 77-79, 92 S. Ct. 862. The Supreme Court did not rest upon this alone, however. The Court relied also upon the fact that the amount of the bond was necessarily arbitrary because it was fixed by automatically doubling the amount of the rent. Under the statute involved in Lindsey, appellee retained the full amount of the bond (double the rental value during appeal) without proof of actual damage if the judgment was affirmed; under section 499g(c) appellee is guaranteed only the amount of the award and costs. Whether the ultimate burden upon the right to appeal will be greater under the Lindsey statute or the statute here depends upon the circumstances of the particular case. In any event, the amount of the double bond required in this case would be beyond the reach of many litigants. Appellant's uncontradicted affidavit asserts that he is entirely unable to obtain a bond of $46,173 double the reparations award plus costs. (In his brief, appellant states that he must pledge "cash, marketable securities or the like, as collateral in the full amount of the double bond" in order to obtain the bond "as a practical matter.") Thus, for this appellant, no less than for the appellants in Lindsey, "as a practical matter, appeal is foreclosed, no matter how meritorious (his) case may be." 405 U.S. at 79, 92 S. Ct. at 877
For example, 7 U.S.C. § 499d(b) (D) provides that the Secretary shall refuse to license an applicant who has failed to pay a reparation order within two years of application; and 7 U.S.C. § 499d(c) provides that on the expiration of two years, such an applicant may be licensed if he furnishes a bond in the form and amount satisfactory to the Secretary "as assurance that his business will be conducted in accordance with this chapter and that he will pay all reparation orders which may be issued against him in connection with transactions occurring within four years following the issuance of the license . . . ." The section further provides that "(t)he Secretary, based on changes in the nature and volume of business conducted by a bonded licensee, may require an increase or authorize a reduction in the amount of the bond." See also id. § 499h(b)