The Perishable Agricultural Commodities Act (“PACA”) was enacted by Congress in order to promote fair trade in the fruit and vegetable industry. The statute promotes fair dispute resolution between produce buyers and sellers and also protects sellers of produce by way of a statutory trust. The focus in this article is to provide a general overview on the dispute resolution procedures afforded by PACA through the use of a reparations process overseen by the USDA.
Reparations Process
At the outset, it should be noted that when buyers and sellers have a dispute, the reparations process is only one avenue towards resolving that dispute. For instance, the parties may also litigate their matters before a United States District Court. However, a large number of buyers and sellers instead choose to utilize the reparations.
The reparations process is divided into two parts: (i) an Informal Complaint Process; and (ii) a Formal Complaint Process. A party making a claim starts by filing an Informal Complaint with the appropriate USDA branch. This Informal Complaint must be filed within nine months after the claim arose. The Informal Complaint generally describes the dispute and describes why the complaining party believes that the other party’s conduct was improper under PACA. The Informal Complaint typically includes invoices, confirmations, purchase orders, correspondence between the parties, and any other evidence related to the dispute.
After the Informal Complaint is filed, a copy is sent to the party against which the claim is being filed, the Respondent, and that party may then respond to the complaint. The USDA will typically then attempt to mediate the matter between the parties in hopes that the dispute can be resolved via these means.
If the parties cannot resolve their dispute during this Informal Complaint stage, the USDA will issue a letter informing the complaining party that the process has been unsuccessful and will give that party 90 days to file a Formal Complaint.
Filing a Formal Complaint
The next step for a complaining party is to file a Formal Complaint with the USDA. After that document is filed, the USDA sends a copy to the Respondent to file an answer and allege any counterclaims that it may have. The process at this point differs depending on the amount in question. If the Formal Complaint, or any counterclaim in the dispute, is for an amount less than $30,000.00, the USDA will decide the dispute via paper filings by the parties, which will consist of:
- An opening statement filed by the complaining party which includes a description of the transaction between the parties and key documents relating to the transaction;
- An answering statement filed by the Respondent in response to the opening statement which includes the Respondent’s side of the story and its own key documents relating to the transaction;
- A reply filed by the complaining party in response to the answering statement and its new contentions; and
- Briefs filed by both parties regarding the legal points and issues in the matter.
The matter is then submitted to an administrative law judge who decides the case and issues an order.
In the event that the Formal Complaint, or any counterclaim in the dispute, is for an amount more than $30,000.00, the parties have the option of having the dispute decided by an oral hearing before a hearing office rather than via paper filings. There are more opportunities for discovery during the oral hearing process, including depositions of witnesses and requests for documents from the other side or third parties. After a hearing office listens to testimony and exhibits are offered into evidence, parties or their attorneys may make oral arguments after which the matter is submitted to an administrative law judge who decides the case and issues an order.
Please note that this is only a general overview of the reparations process of resolving PACA disputes. At the VC Law Group, we represent parties in the PACA complaint process. For more information, please contact us at the VC Law Group via telephone at (858) 519-7333 or email at info@thevclawgroup.com.