Court Opinion

ID: 6974872
Source: CourtListenerOpinion
Date Created: 2022-07-24 02:09:13.192033+00
Date Added: 2024-06-11T16:08:56.370668
License: Public Domain

KOZINSKI, Circuit Judge,
dissenting:
The majority claims it is applying the D.C. Circuit’s PACA caselaw, but those cases do not support the majority’s conclusion. According to the D.C. Circuit, “[a] finding of liability under section 499h of [PACA] must be premised upon personal fault or the failure to ‘counteract or obviate the fault of others.’ ” Minotto v. U.S. Dep’t of Agriculture, 711 F.2d 406, 408 (D.C.Cir.1983) (quoting Quinn v. Butz, 510 F.2d 743, 756 (D.C.Cir.1975)). In Minotto, there was “[conspicuously absent from the record evidence and from the Hearing Officer’s findings of facts or conclusions ... any suggestion that Minotto knew or should have known of the Company’s misdeeds.” Id.
By contrast, the Presiding Officer here found that Maldonado should have known of Dukesherer’s wrongdoing, and that finding is well supported -by the record. Maldonado himself testified that he was aware that some producers were not getting paid. Moreover, as head of the company’s produce department, he was intimately familiar with the business and in a position to do something to prevent future harm. He could, for example, have warned producers not to throw fresh lettuce after wilted. Maldonado was known and trusted in the industry and his silence, in light of what he knew and should have known, may have lulled producers into a false sense of security. Minotto, on which the panel particularly relies, is of no help because there “the Department [of Agriculture] conceded that the Department’s decision was not premised upon Minotto’s failure to counteract the fault of others.” Id. There is no such concession here.1
The majority’s reliance on Bell v. Department of Agriculture, 39 F.3d 1199 (D.C.Cir.1994), is equally misplaced'. Bell was a nominal officer because “[h]e never signed checks or agreements [and] never filed PACA license renewals.” Id. at 1200. Maldonado admits to signing, as president, five checks, two PACA license renewal forms, and a corporate resolution authorizing W. Fay to file for Chapter 7 protection. This also distinguishes his conduct from Minotto’s, who was authorized to write checks, but there is no indication that she actually did so. See Minotto, 711 F.2d at 408 n. 4. Nor was Maldonado quite as naive about corporate governance as the majority seems to believe. While Maldonado spent 5 pages of transcript denying that he even knew corporations had officers, he was finally forced to admit that he did know.- The Presiding Officer could easily discount Maldonado’s self-serving statements as a ploy.
*1090The sum and substance of the D.C. Circuit’s PACA caselaw is that no one will be held liable as a matter of strict liability. See Quinn, 510 F.2d at 756. Maldonado was not held liable based on strict liability; rather, in addition to being an officer, he had hands-on involvement in a key aspect of the business and failed to do what he could to prevent the harm. That Maldonado was also a victim is not as helpful to him as the majority seems to think. With his own money on the line, Maldonado had good reason not to notify producers or the Department of Agriculture that the company was failing to meet its obligations to producers. After all, any such disclosure might have brought the house of cards tumbling down, leading to an immediate loss of Maldonado’s investment.
Maldonado presents a sympathetic case, but PACA is a remedial statute and we must enforce it strictly. The majority’s misapplication is particularly troubling because it purports to adopt the D.C. Circuit’s gloss on the statute, which was encoded in the 1995 amendments to PACA. Yet in our first decision interpreting the amended statute, the majority easts aside much of the D.C. Circuit’s teaching; this despite the fact that the D.C. Circuit has shown no signs of disavowing that precedent, and indeed even cited it approvingly in their first post-amendment case. See n. 1, supra. Given the amount of agricultural business in the states of the Ninth Circuit, this conflict is no small matter.
There is ample evidence to support the Presiding Officer’s findings, and under those findings it is clear that Maldonado was responsibly connected to W. Fay. We must affirm.

. The majority holds that the 1995 amendments to PACA overrule Quinn, insofar as it premised liability on the officer’s failure to counteract the wrongdoing of others. But the statutory passage the majority cites does not go so far. Section 499a(b)(9) precludes the imposition of liability on a nominal officer who is "not actively involved in the activities resulting in a violation.” It does not exonerate someone like Maldonado who was actively involved in the conduct of the business and in a position to learn about the defalcation and do something about it. The D.C. Circuit has certainly recognized the continuing validity of Quinn, see Hart v. Department of Agriculture, 112 F.3d 1228, 1230-31 (D.C.Cir.1997); by holding otherwise the majority is creating a circuit conflict on this issue.