521 F.Supp.3d 170
E.D.N.Y.2021Background:
- Plaintiff is a PACA-licensed produce wholesaler who sold and delivered perishable produce to two defendants: International Quality Fruit (IQF) and H&A International Fruit (H&A).
- Plaintiff invoiced IQF $26,180 (nine shipments, Mar. 18, 2017–Oct. 31, 2018) and H&A $63,071 (nineteen shipments, Oct. 19, 2018–Dec. 18, 2018); each invoice contained the PACA trust notice.
- Plaintiff acquired the produce in Pennsylvania for resale in New York; defendants sold the produce and dissipated the proceeds instead of holding them in trust.
- Defendants defaulted; after the default they appeared and moved to dismiss for lack of subject-matter jurisdiction, arguing they are retail sellers (thus exempt) and that there was no interstate commerce.
- The court accepted well-pleaded allegations as true given the default, found PACA’s elements satisfied, denied the motion to dismiss, and granted plaintiff’s motion for default judgment.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether defendants are "dealers" under PACA (PACA coverage) | Plaintiff: defendants bought in wholesale quantities and invoices contained PACA notice; therefore they fall within PACA’s definition of dealer. | Defendants: they are retail sellers not subject to PACA’s dealer definition/exemption for retail-only purchasers. | Court: statutory text ("buying or selling") and regulatory weight thresholds bring defendants within PACA; dismissal denied. |
| Interstate commerce requirement under PACA | Plaintiff: produce originated in PA for resale in NY, satisfying PACA’s broad "current of commerce" test. | Defendants: all parties are New York residents so no interstate commerce nexus. | Court: interstate nexus satisfied because the produce entered the current of interstate commerce when shipped from PA; requirement met. |
| Personal/joint liability of corporate officers | Plaintiff: officers who controlled the corporate buyers are jointly and severally liable for unpaid produce. | Defendants: did not contest transactional facts; argued only lack of PACA coverage. | Court: Maman (control of IQF and H&A) and Mamayev (control of H&A) found jointly and severally liable with their corporations. |
| Damages, prejudgment interest, and fees/costs | Plaintiff: seeks unpaid principal, prejudgment interest (9%), filing fee; no contractual basis for attorney’s fees shown. | Defendants: did not contest damages figures; argued only jurisdictional/coverage defenses. | Court: awarded unpaid amounts ($26,180 and $63,071), prejudgment interest at 9% (computed from midpoints), and filing fee; denied attorneys’ fees for lack of contractual basis and supporting billing. |
Key Cases Cited
- Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155 (2d Cir.) (well-pleaded allegations of complaint accepted as true on default)
- Credit Lyonnais Sec. (USA), Inc. v. Alcantara, 183 F.3d 151 (2d Cir.) (plaintiff must prove damages with reasonable certainty)
- Bricklayers & Allied Craftworkers Local 2 v. Moulton Masonry & Constr., LLC, 779 F.3d 182 (2d Cir.) (court may rely on affidavits and documentary evidence rather than an inquest for damages)
- Endico Potatoes, Inc. v. CIT Grp./Factoring, Inc., 67 F.3d 1063 (2d Cir.) (district court has broad discretion to award prejudgment interest in PACA cases)
- In re Magic Restaurants, Inc., 205 F.3d 108 (3d Cir.) (entities that purchase produce in wholesale quantities and exceed statutory purchase thresholds are subject to PACA)
- The Produce Place v. Dep’t of Agriculture, 91 F.3d 173 (D.C. Cir.) (PACA’s interstate-commerce requirement construed broadly; transaction may enter the "current" of interstate commerce)
- Arbaugh v. Y & H Corp., 546 U.S. 500 (U.S.) (failure to meet a statutory element or exemption is generally not a jurisdictional defect)