G & T TERMINAL PACKAGING CO., INC. & Tray-Wrap, Inc., Petitioners, v. UNITED STATES DEPARTMENT OF AGRICULTURE, Respondent.
Docket No. 05-5634-ag.
United States Court of Appeals, Second Circuit.
Nov. 3, 2006
Argued: Sept. 15, 2006.
We do not wish to imply that on this evidence the BIA must grant Silva‘s appeal. Rather, we hold only that (1) it is proper to apply a presumption of receipt to a notice sent by regular mail where the record establishes that the notice was properly addressed and mailed according to normal office procedures, and (2) on a motion to reopen, the BIA must consider all relevant evidence, including circumstantial evidence, offered to rebut that presumption.2 We further note that the BIA is free to weigh against Silva the fact that he received the order of removal in 2003, but did not move to reopen his case for more than two years.
For the reasons set forth above, the petition is GRANTED, the decision of the BIA is VACATED, and the case is REMANDED for further proceedings consistent with this opinion. The pending motion for a stay of removal is DENIED as MOOT.
Stephen M. Reilly, Senior Counsel, Office of the General Counsel (James Michael Kelly, Acting General Counsel and Margaret M. Breinholt, Assistant General Counsel, on the brief), U.S. Department of Agriculture, Washington, D.C., for Respondent.
Before: MESKILL, SOTOMAYOR, and KATZMANN, Circuit Judges.
KATZMANN, Circuit Judge:
The matter at hand calls upon us to interpret the Perishable Agricultural Commodities Act (“PACA“),
This case arises out of the rampant corruption that existed for years, if not decades, in the Hunts Point Terminal Produce Market in the Bronx, NY. It is undisputed that many of the produce inspectors hired by the Department of Agriculture to provide impartial assessments of the condition of agricultural commodities arriving at Hunts Point for distribution throughout the metropolitan New York City area, far from acting as honest brokers, regularly accepted, and often demanded, cash payments from the merchants they were supposed to serve. When they did not receive payments from a merchant, the unscrupulous inspectors often would delay the performance of their duties or intentionally skew the results of their inspections in a manner calculated to harm the bottom line of the non-compliant merchant. In con-
I.
A.
The Perishable Agricultural Commodities Act establishes a wide-ranging regulatory regime governing the wholesale trade in perishable goods such as fresh fruits and vegetables.1 As Congress explained in enacting an amendment to PACA in 1956:
The Perishable Agricultural Commodities Act is admittedly and intentionally a ‘tough’ law. It was enacted in 1930 for the purpose of providing a measure of control and regulation over a branch of industry which is engaged almost exclusively in interstate commerce, which is highly competitive, and in which the opportunities for sharp practices, irresponsible business conduct, and unfair methods are numerous. The law was designed primarily for the protection of the producers of perishable agricultural products—most of whom must entrust their products to a buyer or commission merchant who may be thousands of miles away, and depend for their payment upon his business acumen and fair dealing—and for the protection of consumers who frequently have no more than the oral representation of the dealer that the product they buy is of the grade and quality they are paying for. The law has fostered an admirable degree of dependability and fairness in this industry chiefly through the method of requiring the registration of all those who carry on an interstate business in perishable agricultural commodities and denying this registration to those whose business tactics disqualify them.
S.Rep. No. 84-2507, at 3 (1956), as reprinted in 1956 U.S.C.C.A.N. 3699, 3701. The Secretary of Agriculture is charged with implementing and enforcing this regulatory regime, which permits only per-
B.
Petitioners G & T Terminal Packaging Co., Inc. (“G & T“) and Tray-Wrap, Inc. (“Tray-Wrap“) are New York corporations that have held PACA licenses since 1964 and 1970, respectively. G & T deals in wholesale potatoes, while Tray-Wrap operates in the wholesale tomato trade. The two companies share a common mailing address, a common pool of employees, and operated out of the same office at the Hunts Point Terminal Market in the Bronx, NY.4 In addition, they share close ties to Anthony Spinale, who was the director, president and 100 percent owner of G & T, and Tray-Wrap‘s founder and principal manager.
In late 1996, the USDA Office of the Inspector General and the FBI launched an investigation into allegations of corruption in the USDA office in Hunts Point, tipped off by “complaints from a variety of growers that wholesalers seemed to be taking advantage of the inspection system at Hunts Point, forcing growers to make constant price concessions.” The investi-
William Cashin was one of the unscrupulous USDA inspectors. After his arrest, Cashin cooperated with the ongoing investigation into the Hunts Point corruption by surreptitiously making audio and video recordings of his interactions with various Hunts Point inspectors and merchants. Cashin‘s cooperation led to the arrest and indictment of seven other USDA inspectors. The dragnet also ensnared several merchants who were making payments to the inspectors, including Spinale, who was indicted in the Southern District of New York on October 21, 1999, and charged with nine counts of bribing a public official in violation of
On June 3, 2003, the government filed an administrative complaint charging G & T and Tray-Wrap with having “willfully, flagrantly, and repeatedly violated Section 2(4) of the PACA by failing, without reasonable cause, to perform any specification or duty, express or implied, arising out of any undertaking in connection with transactions involving perishable agricultural commodities purchased, received and accepted in interstate or foreign commerce” by making payments, through Spinale, to Cashin. See
ALJ William Moran presided over a six-day disciplinary hearing beginning on October 25, 2004, during which he heard extensive testimony from Cashin and Spinale, as well as other witnesses. Spinale testified that he began to make what became customary gratuity payments in 1991, shortly after the petitioners moved to the Hunts Point Terminal market. According to Spinale, he and Lou Guerra, another produce merchant, “were talking and I had just—I don‘t know if somebody had handed me an inspection or had an inspection, and I turned around and told them that these people up here, they‘re just impossible to work with. They don‘t know what they‘re looking at, you can‘t get a fair inspection, you can‘t get a timely inspection, and Mr. Guerra made some kind of signal to me and basically he was going like this here [rubbing two fingers together], and I said, well, you know, look. If I have to do that, I have to do it. So he turned around and said he‘s going to send somebody to see me and the guy will mention my name and you‘ll know what you have to do.” Spinale testified that he understood Mr. Guerra to mean that he had to give somebody money “[t]o get a fair inspection or a fast inspection.” Spinale further described that “the next time I ordered an inspection, Mr. Cashin popped up, and he turned around and said Lou ... said that I should [say] hello to you, or something similar to that.... [A]fter he finished the inspection, I just turned around and slipped a hundred dollars, just gave him the hundred dollars.... I just gave him a hundred dollars, didn‘t ask him anything, he didn‘t say anything to me and I didn‘t say anything to him.” Spinale stated that he continued to make cash payments to several inspectors thereafter, including Cashin. However, Spinale repeatedly denied that he had made the payments to induce the inspectors to make inaccurate inspections of the arriving produce.6 On the contrary, Spinale testified that, as a general matter, he gave the inspectors cash for the sole purpose of obtaining “fair, fast [and] accurate” inspections. Spinale described the inspectors’ practice of withholding timely and accurate produce inspections unless they were paid as “soft extortion,” and contended that giving in to that “soft extortion” “was something you had to do if you wanted to run a successful business. It was just a necessity.”
Spinale‘s account was corroborated in several respects by the testimony of Paul Cutler and Edmund Esposito, two former Hunts Point USDA inspectors who, like Cashin, were active participants in the bribery scheme and pled guilty to bribery charges. Cutler explained that there was a chronic shortage of USDA inspectors in the Hunts Point office, and that because of this shortage it sometimes took “a day or
Esposito similarly testified that when Hunts Point merchants refused to pay him, “I usually screwed them.” Asked to elaborate, Esposito stated: “I would adjust the inspection. If they had an inspection that might fail good delivery, I might go in there and change—you know, change the numbers and make sure that it passed a good delivery, and they would not get an adjustment on it. Or I would just change temperatures and make the inspection worthless.” Esposito also explained that although as many as “30, 35” merchants were paying the inspectors, not all of paying merchants received the same return on their investments. Instead, according to Esposito, “there were people that paid and you didn‘t do nothing for them, but they still paid. And then there was people that you did things for that paid, also.” Esposito clarified that for the first group “[y]ou just did the normal fair inspection. You gave them a fair inspection and they paid you,” but that he would write false inspection reports on behalf of the second group of merchants. Esposito did not explain why the inspectors treated some paying merchants differently than others. Esposito testified, however, that Spinale never asked him to alter, falsify or downgrade an inspection, though he also testified to having given Spinale “a benefit of doubt on inspections” without having been asked to do so because he “got paid and [Spinale is] a nice guy.”
Cashin also testified at the hearing. Unlike Esposito, Cashin asserted that Spinale had paid the inspectors for more than just “fast, fair and accurate” inspections. Cashin testified that he and Spinale had an “understanding” that Spinale‘s payments were intended to influence, and in fact did influence, the outcome of Cashin‘s inspections. According to Cashin, this “understanding” originally arose from an agreement between Spinale and another USDA inspector, Bob Snolec, and that when Snolec left the USDA, Cashin took over at G & T and Tray-Wrap, telling Spinale, “I‘ll be coming here a lot, I think, and, you know, I‘ll help you like Bob helped you.” Cashin did not describe Spinale‘s response to that statement. Cashin explained that he provided “help” for Spinale and other merchants that paid him illegal gratuities “in any one of three ways, and it‘s a combination of any one of the three factors. The first factor is increasing the number of containers reported on a certificate.... The second way was to increase on the certificate, under the defects, the percent-
On March 28, 2005, Judge Moran issued a lengthy opinion dismissing the government‘s complaint against the petitioners. Judge Moran rejected Cashin‘s claim that Spinale had made the gratuity payments for the purpose of inducing him to make inaccurate inspections, and instead credited Esposito‘s testimony that Spinale “was paying only for a fair and accurate inspection,” also finding broadly that “in all aspects where [Cashin‘s] testimony conflicted with Mr. Spinale‘s testimony, Mr. Spinale‘s testimony was credible and Cashin‘s was not.” Judge Moran also took note of the substantial economic power that the inspectors wielded over the Hunts Point merchants. As Judge Moran colorfully put it, “Cashin and his cabal of corrupt cronies knew they had merchants like Mr. Spinale over a barrel. The merchants could pay them or risk either a delayed inspection or an inspection which rated produce as acceptable when an honest assessment would determine otherwise.” In light of these findings, Judge Moran determined that the payments made by Spinale to Cashin were a “personal fee” extracted by Cashin “for every visit to Mr. Spinale‘s place of business and that in no instance was Mr. Spinale benefitting from those visits [by obtaining] ... an inspection report which downgraded a load of produce from its actual condition.” Having found that Spinale did not benefit in this way, Judge Moran declined to extend preclusive effect to the fact or substance of Spinale‘s admission of guilt to a federal bribery charge, and found that Spinale “was not bribing Cashin but that unlawful gratuities were made.” To Judge Moran, this distinction was determinative, as he found that a licensee has an implied duty to refrain from paying bribes, but does not bear such a duty to refrain from paying illegal gratuities that do not benefit the licensee. He further found that even if the payment of illegal gratuities constitutes a breach of a PACA duty, the illicit payments that Spinale had made to Cashin did not “constitute sufficient cause to warrant revocation of the licenses of G & T and Tray-Wrap when the central contention of the [Petitioners] is that they were being extorted by the Agriculture inspectors in that, if they wanted an accurate inspection of the produce, they would have to pay off the inspectors to receive one.”
The government appealed Judge Moran‘s decision to Judicial Officer William G. Jenson who, pursuant to
With respect to the first, the Judicial Officer concluded that PACA licensees “have a duty to refrain from making payments to [USDA] inspectors in connection with the inspection of perishable agricultural commodities which will or could undermine the trust produce sellers place in the accuracy of the [USDA] inspection certificates and the integrity of [USDA] inspectors,” and that “[a] PACA licensee‘s payment to a [USDA] inspector, whether caused by bribery or extortion and whether to obtain an accurate [USDA] inspection certificate or an inaccurate [USDA] inspection certificate, undermines the trust a produce seller places in the accuracy of the [USDA] inspection certificate and the integrity of the [USDA] inspector.” As such, he concluded that “the purpose and reasons for Anthony Spinale‘s payments to William Cashin are not relevant to this proceeding. A payment to a [USDA] inspector in connection with the inspection of perishable agricultural commodities, whether the result of extortion evidenced in this proceeding or bribery and whether to obtain accurate or inaccurate [USDA] inspection certificates, is a violation of section 2(4) of the PACA.”
The Judicial Officer also rejected the petitioners’ claim that the inspectors’ practice of “soft extortion” constituted reasonable cause for the payments made by Spinale, concluding that “[t]he extortion evidenced in this proceeding is not a ‘reasonable cause’ ... for a commission merchant, dealer, or broker to fail to perform the implied duty to refrain from paying [USDA] inspectors in connection with the inspection of perishable agricultural commodities. Moreover, avoidance of inspection delays and avoidance of the issuance of inaccurate [USDA] inspection certificates are not ‘reasonable causes’ for the commission of such a breach. The Judicial Officer offered no further explanation of what circumstances might be encompassed by the term “reasonable cause,” however.8
Relying on Spinale‘s repeated admissions that he had made numerous payments9 to Cashin in connection with Cashin‘s inspections of agricultural commodities for the petitioners, the Judicial Officer concluded that Spinale, and therefore the petitioners, had “engaged in willful, flagrant,
This timely petition for review of the Secretary‘s decision followed.
II.
A.
The petitioners challenge two conclusions adopted by the Secretary in the course of a formal adjudication conducted pursuant to the agency‘s express statutory authority to administer and implement the PACA regulatory regime. See
We consider both of the petitioners’ arguments against the backdrop of the familiar two-step framework set forth by the Supreme Court in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984). Under Chevron, “[f]irst, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress. If, however, the court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute, as would be necessary in the absence of an administrative interpretation. Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency‘s answer is based on a permissible construction of the statute.” Chevron, 467 U.S. at 842-43 (footnotes omitted). As a result, unless we find the Secretary‘s construction of the statute to be “arbitrary, capricious, or manifestly contrary to the statute,” id. at 844, we must yield to that construction of the statute even if we would reach a different conclusion of our own accord. See Regions Hosp. v. Shalala, 522 U.S. 448, 457, 118 S. Ct. 909, 139 L. Ed. 2d 895 (1998).
It is firmly established that we review under the Chevron standard an agency‘s binding and generally applicable interpretation of a statute that it is charged with administering when that interpretation is adopted in the course of a formal adjudicatory proceeding. See United States v. Mead Corp., 533 U.S. 218, 230 n. 12, 121 S. Ct. 2164, 150 L. Ed. 2d 292 (2001) (citing prior Supreme Court cases applying Chevron to agency adjudicatory decisions); Freeman v. Burlington Broadcasters, Inc., 204 F.3d 311, 322 (2d Cir. 2000) (“An agency‘s interpretation of an ambiguous statute it is charged with administering is entitled to Chevron deference not only when the agency interprets through rule-making, but also when it interprets through adjudication.“). The Supreme Court has indicated that because some “ambiguous statutory terms” can be given concrete meaning only “through a process of case-by-case adjudication,” the individual determinations reached by an agency engaged in that process also “should be accorded Chevron deference.” INS v. Aguirre-Aguirre, 526 U.S. 415, 425, 119 S. Ct. 1439, 143 L. Ed. 2d 590 (1999); see also INS v. Cardoza-Fonseca, 480 U.S. 421, 449, 107 S. Ct. 1207, 94 L. Ed. 2d 434 (1987) (citing Chevron) (“There is obviously some ambiguity in a term like well-founded fear which can only be given concrete meaning through a process of case-by-case adjudication. In that process of filling any gap left, implicitly or explicitly, by Congress, the courts must respect the interpretation of the agency to which Congress has delegated the responsibility for administering the statutory program.“) (quotation marks omitted); In re Sealed Case, 223 F.3d 775, 779-80 (D.C. Cir. 2000) (extending Chevron deference to the Federal Election Commission‘s case-specific probable cause determination).
B.
Our task at the first step of the Chevron analysis is a simple one, as it is pellucidly clear that Congress has not spoken to the precise issues before us in this appeal: whether a PACA licensee bears an implied duty to refrain from paying illegal gratuities to a USDA inspector, and the scope of
C.
1.
We affirm as reasonable the Secretary‘s conclusion that the PACA imposes an implied duty upon licensees to refrain from making payments to USDA inspectors in connection with produce inspections, irrespective of whether those payments induce, or are intended to induce, the inspectors to issue inaccurate inspection certificates. Indeed, given a statutory
Given that a principal purpose of the PACA is to “protect[] ... the producers of perishable agricultural products—most of whom must entrust their products to a buyer or commission merchant who may be thousands of miles away, and depend for their payment upon his business acumen and fair dealing,” see S.Rep. No. 84-2507, at 3, as reprinted in 1956 U.S.C.C.A.N. at 3701, we think it is appropriate for the Secretary to construe the implied duties owed by PACA licensees in a manner designed to secure shippers’ confidence in the USDA agents hired, in effect, to stand in their shoes when the produce arrives at its destination. We therefore conclude that the Secretary has permissibly construed
2.
We also affirm the Secretary‘s conclusion that the inspectors’ practice of withholding “fast, fair and accurate” inspections from merchants who refused to pay illegal gratuities does not excuse the petitioners’ decision to breach the implied duties owed under the PACA by making such payments. Once again we begin with the statute, which provides that “[i]t shall be unlawful in or in connection with any transaction in interstate or foreign commerce ... (4) For any commission merchant, dealer, or broker ... to fail, without reasonable cause, to perform any specification or duty, express or implied, arising out of any undertaking in connection with any [transaction involving any perishable agricultural commodity].”
We think the Secretary‘s case-specific determination that “reasonable cause” had not been demonstrated typically would be entitled to Chevron deference because agencies are generally accorded Chevron deference when they give “ambiguous statutory terms” concrete meaning through a process of case-by-case adjudication.” See, e.g., INS v. Aguirre-Aguirre, 526 U.S. 415, 425 (1999) (internal quotation marks omitted); In re Sealed Case, 223 F.3d 775, 779-780 (D.C. Cir. 2000) (extending Chevron deference to the Federal Election Commission‘s case-specific probable cause determination). Although such case-by-case adjudication may ultimately be necessary to give concrete meaning to the term “reasonable cause” as used in
Coercion, as the various hypotheticals drawn up by the parties in their written submissions and at oral argument reaffirm, exists in many degrees and can take many forms. We may presume that there are species of coercion so extreme that they rob an individual of any meaningful opportunity to resist, as well as varieties too moderate to ever excuse the perform-
In short, we view the record as demonstrating that the inspectors’ corrupt practices left Spinale with choices about how to respond to their demands for illegal payments—hard choices, perhaps, but meaningful ones all the same. Given that backdrop, we concur in the Secretary‘s view that “[t]he extortion evidenced in this proceeding is not a ‘reasonable cause’ ... for a commission merchant, dealer, or broker to fail to perform the implied duty to refrain from paying [USDA] inspectors in connection with the inspection of perishable agricultural commodities.” (emphasis added). We therefore affirm the Secretary‘s decision to strip the petitioners of their PACA licenses.
III.
We have considered all of petitioners’ other arguments and find them to be without merit. Therefore, for the reasons set forth above, the petition for review is DENIED and the decision of the Secretary of Agriculture is hereby AFFIRMED.
ROBERT A. KATZMANN
UNITED STATES CIRCUIT JUDGE
Robert J. MUSSO, Petitioner-Appellant, v. Tanya OSTASHKO, Defendant-Appellee.
No. 05-6935 BK.
United States Court of Appeals, Second Circuit.
Nov. 6, 2006.
Argued: Aug. 9, 2006.