UNITED STATES DEPARTMENT OF AGRICULTURE

BEFORE THE SECRETARY OF AGRICULTURE

 

In re:

 

 

 

Adam T. Smith, d/b/a Adam Smith Livestock,

P&S Docket No. 23-J-0042

 

 

 

 

Respondent.

 

 

 

DECISION AND ORDER WITHOUT HEARING BY REASON OF ADMISSIONS

 

Appearances:

 

Todd J. Lewellen, Esq., Office of the General Counsel, United States Department of Agriculture, Washington, DC, for the Complainant, the Deputy Administrator, Fair Trade Practices Program, Agricultural Marketing Service (“AMS”); and

 

Adam T. Smith, pro se Respondent.

 

Preliminary Statement

This was initiated pursuant to the Packers and Stockyards Act, 1921, as amended and supplemented (7 U.S.C. §§ 181 et seq.) (“Act”); the regulations promulgated thereunder (9 C.F.R. §§ 201.1 et seq.) (“Regulations”); and the Rules of Practice Governing Formal Adjudicatory Proceedings Instituted by the Secretary Under Various Statutes (7 C.F.R. §§ 1.130 et seq.) (“Rules of Practice”) by Complaint filed on April 11, 2023. The Complaint, filed by Deputy Administrator, Agricultural Marketing Service, Fair Trade Practices Program, Packers and Stockyards Division (“Complainant”), alleges that XXXXX Smith, doing business as XXXXX Smith Livestock (“Respondent”), willfully violated the Act and regulations by failing to pay, when due, the full purchase price of livestock in specified transactions with Jersey Shore Livestock Market, Inc. and New Holland Sales Stables, Inc. from June 2020 through September 2021, and by issuing a check in January 2021 in payment for livestock without sufficient funds in his bank account to pay for the check when it was presented for payment.

Respondent timely filed an answer to the Complaint on April 28, 2023, which states, in its entirety: “I XXXXX Smith pleaded guilty to paragraph #2, #3, #4, #5.” Respondent’s Answer does not deny the jurisdictional allegations in paragraph I of the Complaint and explicitly admits the remaining allegations in paragraphs II through V of the Complaint.

I issued an Order Vacating Order Setting Deadlines for Submissions and Directing the Parties to Show Cause Why Summary Judgment Should Not Be Entered Against Respondent on May 5, 2023.[1] On May 25, 2023, Complainant file a Response to Show Cause Order and Request for Decision Without Hearing By Reason of Admissions (“Motion for Decision Without Hearing”) and [Proposed] Decision and Order Without Hearing by Reason of Admissions (“Proposed Decision”). Respondent has not filed any objections to Complainant’s Motion for Decision Without Hearing or Proposed Decision.[2]

Failure to deny or otherwise respond to allegations in the Complaint shall be deemed, for purposes of this proceeding, a waiver of hearing and an admission of the allegations in the Complaint, unless the parties have agreed to a consent decision. 7 C.F.R. §§ 1.136(c), 1.139. Thus, as further explained below, Respondent’s failure to deny the jurisdictional allegations in paragraph I of the Complaint constitutes an admission of those allegations and, because Respondent’s Answer explicitly admits all the other allegations of the Complaint, there are no issues of material fact and the Answer constitutes a waiver of a hearing in this case.

After careful consideration of the record, this Decision and Order is issued without further procedure or hearing pursuant to section 1.139 of the Rules of Practice (7 C.F.R. § 1.139).

Discussion

I.                   Respondent willfully violated sections 312(a) and 409 of the Act by failing to pay, when due, the full purchase price of livestock and by issuing an insufficient funds check in payment for livestock.

 

A.    Respondent violated the Act by failing to pay, when due, the full purchase price of livestock and by issuing an insufficient funds check in payment for livestock.

 

Respondent violated the Act by failing to pay the full purchase price for livestock when required and by issuing an insufficient funds check in payment for livestock. The Act provides that “[e]ach … dealer purchasing livestock shall, before the close of the next business day following the purchase of livestock and transfer of possession thereof, deliver to the seller … the full amount of the purchase price.” 7 U.S.C. § 228b(a). Any delay in payment is considered an “unfair practice” in violation of the Act. 7 U.S.C. § 228b(c); see also 7 U.S.C. § 213(a) (prohibiting “unfair” practices in connection with the purchase of livestock). In addition, “[w]ell-established case precedent holds that ‘the issuance of insufficient funds checks or drafts in payment for livestock … constitutes an unfair and deceptive trade practice in violation of sections 312(a) and 409 of the Act (7 U.S.C. §§ 213(a) and 228b).’” Durflinger, Jr., 58 Agric. Dec. 940, at *2 (U.S.D.A. 1999); see also Ozark County Cattle Co., Inc., 49 Agric. Dec. 336, at *10 (U.S.D.A. 1990); Van Wyk v. Bergland, 570 F.2d 701, 704-705 (8th Cir. 1978).

In this case, Respondent’s Answer explicitly admits the allegations in paragraphs III and IV of the Complaint. Paragraph III of the Complaint alleges that Respondent failed to pay, when due, the full purchase price of livestock in specified transactions in 2020 and 2021 with Jersey Shore Livestock Market, Inc. and New Holland Sales Stables, Inc. Paragraph IV of the Complaint alleges that Respondent issued a check in payment for livestock in January 2021 without sufficient funds in his bank account to pay for the check when it was presented for payment. Respondent thus admits that he failed to pay, when due, the full purchase price of livestock, and that he issued a check in payment for livestock without sufficient funds in his bank account. Accordingly, Respondent has violated sections 312(a) and 409 of the Act (7 U.S.C. §§ 213(a), 228b).

B.     Respondent’s violations of the Act were willful.

Respondent’s violations of the Act were willful. “A violation is willful if, irrespective of evil motive or erroneous advice, a person intentionally does an act prohibited by a statute or if a person carelessly disregards the requirements of a statute.” D.W. Produce, Inc., 53 Agric. Dec. 1672, 1678 (U.S.D.A. 1994). Indeed, “it is the Secretary’s position that any prohibited conduct in which a person intentionally engages is willful, even though the person may not have known that the conduct was prohibited or even if he did not intend to do anything wrong.” Hardin County Stockyards, Inc., 53 Agric. Dec. 654, 656 (U.S.D.A. 1994).

Here, Respondent’s Answer explicitly admits the allegations of paragraph II of the Complaint. Paragraph II of the Complaint alleges that the Agricultural Marketing Service, Fair Trade Practices Program, Packers and Stockyards Division (“PSD”) issued Respondent a Notice of Violation in March 2020 which informed him that he had failed to make prompt payment for certain livestock purchases in 2019. The notice further informed Respondent that failure to pay for livestock by the close of the next business day following purchase and transfer of possession thereof is a violation of the Act, and that failure to correct his business practices and bring them into statutory compliance could subject him to disciplinary action. Notwithstanding this prior notice, Respondent admits that he failed to timely pay for the livestock purchases at issue in this matter in 2020 and 2021, and that he issued an insufficient funds check in payment for livestock in January 2021. Therefore, Respondent’s violations of the Act were willful. See D.W. Produce, Inc., 53 Agric. Dec. at 1678.

II.                Respondent’s violations justify a cease and desist order and civil monetary penalty.

 

Complainant requests an order requiring Respondent to cease and desist from failing to pay, when due, the full purchase price of livestock, and issuing checks in payment for livestock without sufficient funds in his bank account to pay for the checks when they are presented for payment. Complainant also requests an order suspending Respondent’s registration as a dealer under the Act for a period of five years, provided that such suspension shall end if (1) Respondent submits proof to the Packers and Stockyards Division establishing that the livestock sellers listed in the Complaint have been paid in full, and (2) following that submission of proof, Respondent pays a civil penalty of $1,000.00. Complainant further requests that such submission of proof and the civil penalty be provided through Complainant’s counsel. Respondent shall contact Complainant’s counsel by telephone or email if and when such proof and the civil penalty are available to be submitted, and Complainant’s counsel will provide Respondent with further instructions regarding the method by which such proof and civil penalty may be submitted.

The Act authorizes the Secretary to issue an order requiring a respondent to cease and desist from violating the Act and to assess a maximum civil penalty of $11,000[3] for each violation of the Act found to exist. 7 U.S.C. § 213(b). The Act also authorizes the Secretary to suspend a dealer’s registration for violations of the Act. 7 U.S.C. § 204.

The Secretary’s policy in disciplinary proceedings is to impose sanctions based on the specific circumstances of each case. See Middlebury Packing Co., Inc., 53 Agric. Dec. 639, 652 (U.S.D.A. 1993). This policy is intended to deter respondents and other members of the industry from committing the same or similar violations of the Act in the future. Id. As the Judicial Officer explained in S.S. Farms Linn County, Inc.:

the sanction in each case will be determined by examining the nature of the violations in relation to the remedial purposes of the regulatory statute involved, along with all relevant circumstances, always giving appropriate weight to the recommendations of the administrative officials charged with the responsibility for achieving the congressional purpose.

 

50 Agric. Dec. 476, 497 (U.S.D.A. 1991). In determining the amount of the civil penalty to be assessed, the Act requires the Secretary to consider the gravity of the offense, the size of the business involved, and the effect of the penalty on the person’s ability to continue in business. 7 U.S.C. § 213(b). PSD has considered these factors in formulating its recommended sanctions in the case.

The sanctions sought by Complainant are reasonable; the Complaint alleges serious and willful violations of the Act. Specifically, the Complaint alleges that Respondent failed to pay, when due, the full purchase price of livestock in eleven (11) separate transactions from June 2020 through September 2021, totaling $148,483.21, including one transaction in which Respondent issued an insufficient funds check in payment for livestock. The Act thus authorizes Complainant to seek a maximum civil penalty of approximately $321,970.00 (obtained by multiplying 11 by $29,270). See 7 U.S.C. § 213(b); 7 C.F.R. § 3.91(b)(1)(lix) (amending the maximum civil penalty per violation of the Act to $29,270 effective from June 17, 2020, through May 9, 2021; and to $29,616 effective from May 10, 2021, through February 14, 2022). The requested civil penalty of $1,000.00 is far below this maximum amount.

Complainant’s request for an order requiring Respondent to cease and desist from violating the Act is also reasonable and appropriate given Respondent’s acknowledged history of failing to timely pay for livestock and issuing an insufficient funds check in payment for livestock. Finally, Complainant’s request for an order suspending Respondent’s registration as a dealer under the Act for a period of five (5) years (or until Respondent submits proof to the Packers and Stockyards Division establishing that the livestock sellers listed in the Complaint have been paid in full) is also reasonable and consistent with the remedial purposes of the Act.

III.             Entry of a decision and order without hearing by reason of admissions is appropriate.

 

The entry of a decision without a hearing by reason of admissions is appropriate in this case. Under section 1.139 of the Rules of Practice, “the admission by the answer of all the material allegations of fact contained in the complaint, shall constitute a waiver of hearing.” 7 C.F.R. § 1.139. In such cases, the presiding administrative law judge is authorized to “issue a decision without further procedure or a hearing.” Id. Here, Respondent’s Answer admits all the material allegations of the Complaint.[4] The entry of a decision without a hearing is appropriate.

Accordingly, having carefully considered the pleadings, relevant authorities, and the parties’ arguments, the following Findings of Fact, Conclusions of Law, and Order are entered without further procedure or hearing pursuant to section 1.139 of the Rules of Practice (7 C.F.R.

§ 1.139).

 

 

Findings of Fact

1.      Respondent is an individual whose mailing address is in Pennsylvania. Respondent’s address will not be stated in this Decision and Order to protect his privacy, but will be provided to the Hearing Clerk’s Office, United States Department of Agriculture, for service purposes.

2.      Respondent is, and at all times material to this Complaint, was:

a.       engaged in the business of a dealer buying and selling livestock in commerce for his own account; and

b.      registered with the Secretary of Agriculture as a dealer to buy and sell livestock in commerce.

3.      On March 17, 2020, the United States Department of Agriculture, Agricultural Marketing Service, Fair Trade Practices Program, Packers and Stockyards Division sent Respondent a Notice of Violation (“NOV”) informing him that he had failed to make prompt payment for certain livestock purchases from August 2019 through December 2019. The NOV further informed Respondent that failure to pay for livestock by the close of the next business day following purchase and transfer of possession is a violation of the Act, and that failure to correct his business practices and bring them into statutory compliance could subject him to disciplinary action. Notwithstanding the NOV, Respondent continued to engage in the business of a dealer buying and selling livestock in commerce without paying, when due, the full purchase price of livestock, as required by the Act and regulations.

4.      On or about the dates and in the transactions set forth below, Respondent failed to pay, when due, the full purchase price of livestock:

Date of Purchase

Livestock Seller

Number of Head

Date Payment Due

Invoice Amount

6/18/20

Jersey Shore Livestock

Market, Inc.

119

6/19/20

$13,645.70

4/27/21

Jersey Shore Livestock

Market, Inc.

1

4/2821

$224.40

05/06/21

Jersey Shore Livestock

Market, Inc.

62

05/07/21

$8,768.31

05/27/21

Jersey Shore Livestock

Market, Inc.

78

05/28/21

$9,132.40

09/16/21

Jersey Shore Livestock

Market, Inc.

59

09/17/21

$6,172.35

12/07/20

New Holland Sales

Stables, Inc.

163

12/08/20

$15,389.15

12/14/20

New Holland Sales

Stables, Inc.

141

12/15/20

$17,519.35

12/21/20

New Holland Sales

Stables, Inc.

114

12/22/20

$16,908.70

01/18/21

New Holland Sales

Stables, Inc.

88

01/19/21

$13,444.90

01/25/21

New Holland Sales

Stables, Inc.

141

01/26/21

$19,953.70

02/04/21

New Holland Sales

Stables, Inc.

222

02/05/21

$27,324.25

 

 

 

 

Total: $148,483.21

 

5.      In January 2021, Respondent issued a check for 88 head of livestock in the amount of $13,444.90, without sufficient funds in his bank account to pay for the check when it was presented for payment.

Conclusions of Law

1.      The Secretary of Agriculture has jurisdiction in this matter.

2.      Respondent willfully violated sections 312(a) and 409 of the Act (7 U.S.C. §§ 213(a), 228b) by failing to pay, when due, the full purchase price of livestock and by issuing an insufficient funds check in payment for livestock.

3.      The following Order is authorized by the Act and warranted under the circumstances.

ORDER

1.      Complainant’s Request for Decision Without Hearing by Reason of Admissions is GRANTED.

2.      Respondent Adam T. Smith, doing business as Adam Smith Livestock, and Respondent’s agents, employees, successors, and assigns, directly or indirectly or through any corporate or other device, in connection with Respondent’s activities subject to the Act, shall cease and desist from:

a.       Purchasing livestock and failing to pay, when due, the full purchase price of such livestock within the time period required by the Act and regulations; and

b.       Purchasing livestock and issuing checks in purported payment for such livestock without sufficient funds in Respondent’s bank account to pay for the checks when they are presented for payment.

3.      Respondent’s registration as a dealer under the Act is suspended for a period of five (5) years from the date of this Decision and Order, provided that such suspension shall end if:

a.       Respondent submits proof to the Packers and Stockyards Division establishing that the livestock sellers listed in the Complaint have been paid in full; and

b.      Following that submission of proof, Respondent pays a civil penalty of $1,000.00. Such submission of proof and payment for civil penalty shall be provided through Complainant’s counsel. Respondent shall contact Complaint’s counsel by telephone or email if and when such proof and civil penalty are available to be submitted, and Complainant’s counsel will provide Respondent with further instructions regarding the method by which such proof and civil penalty may be submitted.

            This Decision and Order shall be final and effective without further proceedings thirty-five (35) days after service unless an appeal to the Judicial Officer is filed with the Hearing Clerk within thirty (30) days after service, as provided in sections 1.139 and 1.145 of the Rules of Practice (7 C.F.R. §§ 1.139 and 1.145).

Copies of this Decision and Order shall be served by the Hearing Clerk upon each of the parties, with courtesy copies provided via email where available.

Done at Washington, D.C., this 7th day of July 2023

 

 

 

Tierney Carlos /S/

Tierney Carlos

Administrative Law Judge

 

 

Hearing Clerk’s Office

United States Department of Agriculture

Stop 9203, South Building, Room 1031

1400 Independence Avenue, SW

Washington, DC 20250-9203

Tel.:     1-202-720-4443

Fax:     1-844-325-6940

SM.OHA.HearingClerks@USDA.GOV


[1] An Order Setting Deadlines for Submissions was issued on May 1, 2023, but was vacated by this subsequent Order due to the failure of Respondent to deny the allegations in the Complaint.

[2] United States Postal Service records reflect that the Motion for Default and Proposed Decision were sent to Respondent via certified mail and delivered on June 9, 2023. Respondent had twenty (20) days from the date of service to file objections thereto. 7 C.F.R. § 1.139. Weekends and federal holidays shall not be included in the count; however, if the due date falls on a Saturday, Sunday, or federal holiday, the last day for timely filing shall be the following workday. 7 C.F.R. § 1.147(h). In this case, Respondent’s objections were due by June 29, 2023. Respondent has not filed any objections.

[3] The maximum civil penalty for each violation of the Act was amended by 7 C.F.R. § 3.91(b)(1)(lix) to be $29,270 effective from June 17, 2020, to May 9, 2021; and $29,616 effective from May 10, 2021, to February 14, 2022.

[4] As noted above, Respondent’s Answer explicitly admits the allegations contained in paragraphs II through V of the Complaint. In addition, because Respondent’s Answer does not deny or otherwise respond to the allegations in paragraph I of the Complaint, those allegations are deemed admitted. See 7 C.F.R. § 1.136(c).