Tag Archives: Food Law

PACA Trust Litigation Alert!

PACA Trust Litigation Alert

PACA Trust Litigation Alert

On March 21, 2013, a civil action was filed in Pennsylvania against Jerilu Fruit and Produce Company d/b/a Jerilu Produce Center to collect about $423,700.00 in alleged PACA trust debt.

On April 3, 2013, a civil action was filed in California against The Alphas Company, Inc. to collect about $340,500.00 in alleged PACA trust debt.

On April 5, 2013, a civil action was filed in Maryland against Panache Cuisine, LLC to collect about $167,400.00 in alleged PACA trust debt.

On April 8, 2013, a civil action was filed in California against Sunset Fresh Produce Co., Inc. to collect about $9,000.00 in alleged PACA trust debt.

On April 8, 2013, a civil action was filed in Connecticut against Connecticut Fresh, Inc. to collect about $12,800.00 in alleged PACA trust debt.

On April 11, 2013, a civil action was filed in Florida against Fresh Results LLC to collect about $1,750,000.00 in alleged PACA trust debt.

Please check your A/R to see if these cases affect you.  If they do, please do not wait to enforce your rights.

Obama’s Proposed Budget for FY2014 Calls For $252 Million in Fees For the Food Industry

FDA Budget PicAs reported by Food Safety News on April 11, 2013, the Obama administration is “seeking a significant increase in funding at the U.S. Food and Drug Administration to help the agency implement the monumental Food Safety Modernization Act.”  Obama Administration Seeks FDA Funding Increase for FSMA Implementation

Noting that the “administration’s budget is very unlikely to be enacted,” Food Safety News reported that:

The White House proposed $3.8 trillion in spending for fiscal year 2014, including $4.7 billion for FDA, which represents a more than 20 percent increase over its 2012 budget. More than 90 percent of the $821 million boost would come from industry user fees.

For food safety, the administration is proposing a $295 million increase, compared to FY 2012, to “build a strong, reliable food safety system,” but only $43 million of that increase would be regular funding. More than $252 million of it would come from food facility registration and inspection fees and food importer fees, but it’s not clear that Congress will actually mandate those fees for the food industry.

According to the budget breakdown from the White House, legislation will be proposed to allow FDA to collect fees for food facility registration and inspection as well as for food import to implement the requirements of FSMA. The document says $59 million would come out of registration and inspection fees. On the import side, the administration estimates it would collect $166 million to support food safety efforts. The food industry has long argued against user fees.

As the FDA continues to roll out FSMA, the produce industry should make every effort to stay up-to-date on how FSMA will impact the industry from a practical standpoint.  To be clear, FSMA will (rightly or wrongly) bring global changes to the produce industry and those changes require funding.  No matter what the final budget looks like, the food industry will ultimately bear the bulk of the costs associated with implementing and enforcing FSMA.  For that reason alone, the produce industry should take great interest in every word used in every regulation and understand every dollar associated with every regulatory fee charged.  I urge you to contact your industry association, your peers, your lawyer, etc…. Voice your concerns about how FSMA affects your business.

United Fresh Produce Association Calls for More Time to Comment on FSMA’s Proposed Rules

United Fresh LogoOn April 11, 2013, United Fresh Produce Association, on behalf of almost 90 separate produce industry groups, formally petitioned the FDA to enlarge the May 16, 2013 deadline for submitting industry comments to the proposed Produce Safety and Preventative Controls Rules under FSMA.  United Fresh’s request for more time is “necessitated by the complex and substantial changes proposed for the fresh and fresh-cut produce industry by these proposed rules.”  United Fresh’s April 11, 2013 Letter to FDA

United Fresh’s letter further states that the proposed Preventative Controls Rule “represents a substantial overhaul of the Current Good Manufacturing Practices (CGMP) regulations regarding the manufacturing, processing, packing, or holding of human food.  The CGMP regulations were last revised nearly thirty years ago.”  Based on this and other facts, United Fresh stated that “it would be impossible for any interested party to meaningfully comment on these two proposed rules by the current deadline of May 16, 2013.”  And, that the Produce Safety Rule and the Preventative Controls Rule “are actually two of a suite of interlocking regulations that will fundamentally alter the global fresh and fresh-cut produce industry.”

To be clear, United Fresh is calling for no less than a 180 day extension of the comment period AFTER the FDA issues the last of the proposed rules for “the Foreign Supplier Verification Program, Preventative Controls for Animal Feed, and the Accredited Third Party Certification.”  The FDA has yet to announce the publication date for these already past due rules.

What does that mean?  This is an open-ended request for an enlargement of time that may fail because it is open-ended.  In my opinion, United Fresh’s position is well founded and their request is appropriate.  However, I would hate to see the FDA deny United Fresh’s request based on a technical foul, which is the absence of a specific comment period closing date.  I think the better procedural approach would be to ask the FDA for an enlargement of time from May 16, 2013 to a date certain and separately (but perhaps in the same letter) request that each new proposed rule be given no less than a 180 day comment period right out of the gate.

Please remember that many of FSMA’s proposed rules are already significantly past their legislatively imposed publication date.  As a matter of fact, the Center for Food Safety and the Center for Environmental Health filed a civil action in August of 2012 against the FDA and the White House Office of Management and Budget in an effort to compel the federal government to comply with FSMA’s deadlines.  Against this backdrop, it may be risky for United Fresh to seek an open-ended enlargement of time on any comment period… no matter how well supported.

Is My Produce Buyer Creditworthy?

CreditworthinessNothing is more important to a produce company’s cash flow than ensuring the creditworthiness of its customers.  This statement begs the question:

How do I evaluate a buyer’s creditworthiness?

First, make sure your buyer has a PACA license and that the license is in good standing with the USDA.  To do this, simply go to the USDA’s website (http://apps.ams.usda.gov/pacasearch/) and search for your buyer.  If your buyer is a PACA licensee you will be able to see a summary report of their license, which has key information about the buyer.  Specifically, you will be able to see the buyer’s license number, the status of the license, the buyer’s business name and trade names, the buyers contact information, branch office information, and the principal of the buyer.  All of this information is free to those who know where to look and those who bother to look.

Your due diligence does not stop here.  The next step is for you to use either (or both) the Blue Book Services or the Red Book Credit Service to get credit and trade information about your buyer.  For those of you who do not know, the Blue Book Services and the Red Book Credit Services are companies who publish credit information about produce companies.  If one or both of these books list your buyer, you will be able to see whether that buyer possesses an industry credit rating and to what extent others extend credit to your buyer.  You may also be able to see how quickly the buyer pays its bills or if there are payment problems associated with your buyer.  With that said, it is important to note that not all payment problems are the result of financial problems.  Credit reporting agencies generally do not distinguish between a buyer’s inability to pay and a buyer’s legitimate refusal to pay an invoice.  As you can see, we are developing a buyer profile that helps us predict the amount of risk associated with a given buyer.

Next, you should take the information you have gathered thus far and look to the buyer’s secretary of state (usually the state in which the buyer is located, but not always) for copies of any publicly available incorporation documents, which are often online.  These documents show the buyer’s organizational structure (e.g. company, partnership, LLC, etc.) and they name the buyer’s registered agent.  A quick review of the buyer’s incorporation documents will tell you whether the company is in good standing and where you need to go to chase them for money, if needed.

Not to sound obvious, but it never hurts to simply spend time researching your buyer on the internet.  Look for articles about the buyer, look to see if the buyer maintains a website, look for any negative press about the buyer, look the buyer on various social media outlets, etc.  Gather as much information as you can about each buyer and save it in your client file.  You should also update this information from time-to-time.

Lastly, you can always call the PACA and ask a representative whether there are any pending PACA cases against your buyer at the USDA.  The representative may not give you too many details, but they will tell you whether there are any cases against your buyer for non-payment.

Every produce company should set up a due diligence process designed to help the company evaluate the creditworthiness of its customers.  The time invested in learning about your customers will help you make good credit decisions and will greatly reduce the amount of bad debt on your books.  As you know, a sale is never complete until you are paid in full.

PACA Trust Litigation Alert

PACA Trust Litigation Alert

PACA Trust Litigation Alert

On April 2, 2013, a civil action was filed in New Jersey against New Edge International, LLC to collect about $31,600.00 in alleged PACA trust debt.

Please check your A/R to see if this case affects you.  If it does, please do not wait to assert your rights.

FDA Extends Comment Period on the IFT’s Report to the FDA on the Improvement of Tracking and Tracing Food

IFT LogoOn April 2, 2013, the FDA issued a Notice extending the comment period on the Institute of Food Technologists’ findings and recommendations to the FDA for the improvement of tracking and tracing food under FSMA.  The new deadline to submit comments on the IFT’s report is July 3, 2013.

To be clear, the Federal Register of March 5, 2013 included a FDA Notice with a 30-day comment period for the industry to submit comments on the findings and recommendations contained in the IFT report and to submit additional information relevant to improving food traceability.  The IFT’s report, together with industry comments, will help the FDA as it forms its own recommendations as it works to prepare the agency’s report to Congress, which FSMA requires.

Those of you who follow these issues know that the IFT’s report is well over 300 pages long and is a technical document.  I think the FDA’s enlargement of time is appropriate because the industry needs time to review the IFT’s report and to prepare meaningful commentary and other related submissions.  Please use this time wisely.  As you can tell from recent FDA guidance documents, FSMA applies to everyone and the costs associated with food traceability will also affect everyone.  Now is the time to voice any concerns you or your association may have on this topic.

 

Freeborn & Peters’ New Look & New Promise!

Freeborn Tag Logo_high res

On March 28, 2013, Freeborn & Peters LLP launched a new website and announced a new promise to our clients.  At Freeborn:

“Your Future Is Our Purpose.“

When we say Your Future Is Our Purpose, our goal is to help your business grow and develop to its highest purpose.  To this end, we have more than 200 professionals assisting clients with their legal and business matters across the country and often across international borders.  Through Freeborn’s legal practices, our goal is to provide premium quality legal services that advance the interests, defend the rights and build a better future for our clients – across industries, service lines, and geogpraphy.

We invite you to check us out at: Freeborn & Peters

PACA Trust Litigation Alert

PACA Trust Litigation Alert

PACA Trust Litigation Alert

On March 26, 2013, a civil action was filed in California against So Cal Fresh Choice, Inc. d/b/a Upland Farmers Market to collect about $15,000.00 in alleged PACA trust debt.

Please check your A/R to see if this case affects you.  If it does, please do not wait to protect your rights.

FSMA Update: FDA Issues Produce Safety Rule FAQs

FSMA LogoThis week the FDA launched an updated its Frequently Asked Question & Answer (“FAQs”) section to include detailed areas on the two recently introduced food safety rules, which addressed preventative controls and produce safety.

The updated FAQ section related to the Produce Safety Rule is a fifteen (15) page document that attempts to answer everything from “What does the proposed produce safety rule establish?” to questions about the FDA’s access to company records.  Here is a link to The Produce Safety Rule: Frequently Asked Questions and Answers – Produce Safety Rule

Produce industry stakeholders and related associations should take the time to read and understand the Produce Safety Rule FAQs because it addresses such critical issues as:

  • How does the proposed rule define “agricultural water?”
  • FDA access to company records
  • How does the proposed rule define “farm?”
  • When packing produce is subject to the Produce Safety Rule

As previously noted, the FDA extended the comment period on the Produce Safety Rule until May 16, 2013.  Please exercise your right to let the FDA know if you have any specific or industry related concerns about this rule.  Once the comment period closes, the FDA will respond to comments and finalize the rule.  At that point, the Produce Safety Rule will be binding and enforceable.

New Trademark Clearinghouse Offers Protection for Your Trademarks in Cyberspace

trademark_720If you operate in the food space and offer branded products and/or if your company name is valuable, please  read this entry.  Beginning on March 26, 2013, you will be able to record your trademarks with the Trademark Clearinghouse, which will help protect your marks from being registered as a domain name with a new generic Top-Level Domain.  The new Trademark Clearinghouse will notify owners who record their trademarks with the Trademark Clearinghouse when a domain name under a new gTLD is filed that is identical to the owner’s trademark.

Why record your trademarks with the Trademark Clearinghouse?

If you record your trademark with the Trademark Clearinghouse and someone attempts to register a domain name under any gTLD that is identical to your mark, the Trademark Claims Service of the Trademark Clearinghouse will issue a notice to the potential registrant notifying it of your trademark. If the registrant then proceeds with the registration process, the Trademark Clearinghouse will notify you so that you can take appropriate action.

Another benefit of Trademark Clearinghouse recordation is that those who record their marks will have the benefit of “Sunrise Services.” Sunrise Services allow those who have trademarks registered with the Trademark Clearinghouse to register domains for a specified gTLD that match their trademarks for a period of at least 30 days before the general public.

What trademarks can be recorded with the Trademark Clearinghouse?

If your trademark is registered with the United States Patent and Trademark Office (“USPTO”), you can record it with the Trademark Clearinghouse (the Trademark Clearinghouse will not record marks that are the subject of a pending application). The Trademark Clearinghouse will also record trademarks that have been validated through a court of law or other judicial proceeding; trademarks protected by a statute or treaty; and, other marks that constitute intellectual property may be recorded in the Trademark Clearinghouse by arrangement with a registry.

The Trademark Clearinghouse’s recordation service is only available for trademarks consisting of textual elements, i.e., letters, words, numerals or typographical characters. Marks consisting solely of design elements cannot be recorded with the Trademark Clearinghouse.

For more information about the Trademark Clearinghouse, please see Andy Goldstein’s Article: New Trademark Clearinghouse Offers Protection for Your Trademarks in Cyberspace