Tag Archives: PACA attorney

Guilty Plea Entered in Tomato Fraud Case

Scott Salyer, former CEO of SK Foods LP, pleads guilty to allegations of price-fixing, bribery and racketeering. 

SK Foods, LP was a grower and processor of tomato and other food products.  According to various court documents, SK Foods paid bribes and kickbacks to purchasing agents of several of SK Foods’ customers.  In return for these routine payments, purchasing managers at B&G Foods, Inc., Frito-Lay, Inc. and Kraft Foods, Inc. promoted SK Foods products at their respective companies in order to ensure SK Foods obtained certain supply contracts.

According to these same documents, SK Foods also routinely and materially falsified the values of the various grading factors and data contained on the certificates of analysis, bills of lading, invoices, and bin labels.   These documents were falsified in order to make it appear to SK Foods’ customers that they were in fact receiving product that met their purchasing requirements and to avoid rejections of troubled product.  A specific example of this type of activity included the alleged modification of the labeling on certain tomato paste from conventional to organic.  This labeling change was alleged to have been made in order to make a sale to a customer who would not purchase conventional tomato paste. 

The court documents further discuss a price-fixing scheme involving product sold to McCain Foods, USA, Inc.  The primary purpose of the alleged price-fixing scheme was to install a floor in the base price for tomato paste sold to McCain Foods through a competitive bidding process.

Assuming the Court accepts the plea agreement, Salyer may face between four and seven years of incarceration.  In addition, Salyer must forfeit to the United States his right, title and interest in millions of dollars he transferred out of the United States in January of 2010.

Scott Salyer Pleads Guilty in Tomato Fraud Case – The Packer

PACA Trust Litigation Alert

PACA Trust Litigation Alert

PACA Trust Litigation Alert

On March 22, 2012, a civil action was filed in New York against X & L Supermarket, Inc. in an effort to collect approximately $84,290.00 in alleged PACA debt. 

On March 20, 2012, a civil action was filed in Ohio against Meduri Brothers Produce, Inc. in an effort to collect approximately $7,400.00 in alleged PACA debt. 

On March 19, 2012, a civil action was filed in Kentucky against Foodtown Supermarkets of Kentucky, Inc. d/b/a Big Value Discount Food and d/b/a Slone’s Signature Market in an effort to collect approximately $26,980.00 in alleged PACA debt. 

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

FSMA: Consumers are not protected when the FDA’s rules are “stuck in review.”

On March 19, 2012, the Consumer Federation of America announced that its members voted to support a resolution urging the Obama Administration to issue four proposed food safety rules, which have been delayed for over two months. 
 
“On behalf of CFA’s nearly 300 members, we urge the Administration to immediately issue these important food safety proposals,” said Chris Waldrop of CFA’s Food Policy Institute.  “The longer these proposals are delayed, the longer it will take to fulfill the promise of the Food Safety Modernization Act, which is intended to better protect consumers from foodborne illness.”  Simply put, “consumers won’t be adequately protected if the FDA’s proposals are stuck in review.”  See CFA Press Release.
 
Being in the trenches with my food industry clients on a daily basis, I can confirm that the CFA’s position is well aligned with the industry’s current thinking.   However, I would like highlight the importance of the food industry’s comment period and the FDA’s attention to our collective voice.   As we all know, it is critical for the food industry to speak up and use comment opportunities to help shape the very rules that govern our business operations. 
 
To rush this process and force a potentially premature closure to the FDA’s listening period (e.g. when FDA uses the industry’s comments to further modify the proposed rules prior to issuance) invites future litigation to resolve issues of fairness, application, constitutionality, language interpretation, etc.   Although accountability is critical, I always urge people to look at all sides of any given position.
 
With that said, we are all waiting for the FDA to issue its long overdue food safety rules.   

Words produce buyers should NOT rely upon…

Use of words such as “work out the load“or “sell the product and we will settle at a later date” by the seller are NOT sufficiently specific to constitute an authorization that the buyer handle the produce on consignment.  Granada Marketing, Inc. v. Jos. Notarianni & Co., Inc., 47 Agric. Dec. 329 (1988); Royal Packing Co. v. William D. Class, Jr. d/b/a W.D. Class & Son, 42 Agric. Dec. 2077 (1983); B&L Produce of Arizona v. Mim’s Produce, 37 Agric. Dec. 201 (1978).

Similarly, “do the best you can” does NOT constitute permission to handle on consignment.  Relan Produce Farms v. Rushton & Co., 38 Agric. Dec. 1636 (1979); B & L Produce, Inc. v. Harry Becker Produce Co., 36 Agric. Dec. 913 (1977); Barkley Company of Arizona v. Ifsco, Inc., 31 Agric. Dec. 279 (1972).

Nor does:

“the buyer should work it out.” See Frank Gaglione & Sons v. Theron Hooker Co., 30 Agric. Dec. 528 (1971).

or “handle best possible” or “handle to best advantage.” See Ralph Samsel v. L. Gillarde Sons Co., 19 Agric. Dec. 374 (1960).

or “handle” or “open.”   See Ronnie Carmack v. Delbert E. Selvidge, 51 Agric. Dec. 892 (1992).

or respondent “should keep the shipment, [and] do with it what respondent could. . ..”  See Chiquita Brands, Inc. v. Joseph Williams, Jr. Co. Inc., 45 Agric. Dec. 374 (1986).

Still further, the phrase “customer will keep + Work Out” did NOT signify an agreement that the load could be handled on a consignment basis.   See The Lionheart Group, Inc. v. Sy Katz Produce, Inc., 59 Agric. Dec. 449 (2000).

Buyer’s Obligation to Modify Agreement or Reject Produce

When a buyer is seeking permission from the seller to sell a troubled load of produce on a price after sale (“PAS”) basis the buyer must take steps to ensure that the parties’ fixed price agreement (e.g. the invoice) is modified.

To convert a fixed price term agreement to PAS terms, the buyer must obtain clear, definite and unequivocal authorization from the seller.  Absent such authority, the Seller may successfully enforce the terms of its fixed price invoice and they buyer may have lost the opportunity to properly reject the produce or otherwise protect itself.

Video Presentations from Freeborn & Peters’ SOLD OUT Food Safety Event

For those of you who could not attend our recent food safety event at the Federal Reserve Bank in Chicago, IL on March 1, 2012, please follow the link below to see take look at the video recordings of the keynote speakers and panel discussions.  

Opportunities and Challenges in Food Importation Event Video Library

This sold out event provided some VERY important and timely information about the Food Safety Modernization Act, the FDA’s food traceability pilot programs, and the current thinking of industry leaders.

PACA Trust Litigation Alert

PACA Trust Litigation Alert

PACA Trust Litigation Alert

On March 15, 2012, a civil action was filed in New York against Carlos Bonilla d/b/a Carlos Food Center in an effort to collect approximately $22,000.00 in alleged PACA debt.  The Plaintiff also moved the Court for the entry of a Temporary Restraining Order.

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

Is Unloading Produce an Act of Acceptance?

As a general rule, the unloading or partial unloading of the transport is an act of acceptance.  UCC 2-606(1) (c).  See also 7 C.F.R. 46.2 (dd)(1).

M. J. Duer & Co., Inc. v. The J. F. Sanson & Sons Co. and C. H. Robinson Co., 49 Agric. Dec. 620 (1990); Jim Hronis & Sons v. M. Pagano & Sons, Inc., 46 Agric. Dec. 1010 (1987); Harvest Fresh Produce, Inc. v. Clark-Ehre Produce Co., 39 Agric. Dec. 703 (1980); Crown Orchard Co. v. Mid – Valley Prod. Corp., 34 Agric. Dec. 1381 at 1385 (1975); Theron Hooker Co. v. Ben Gatz Co., 30 Agric. Dec.1109 (1971); Conn & Scalise Co., Inc. v. Frank J. Crivella & Co., Inc., 20 Agric. Dec. 415 (1961); Charles P. Tatt Fruit Co. v. Mac’s Produce, 9 Agric. Dec. 802 (1950).

Where tomatoes were unloaded prior to inspection, and Respondent, after seeing the results of the inspection, notified Complainant that the load was being rejected, it was held that Respondent’s attempted rejection was illegal and ineffective because the unloading of the tomatoes amounted to an acceptance.  J&J Produce Co., Inc. v. Weis-Buy Services, Inc., 58 Agric. Dec. 1095 (1999).

Where Respondent gave notice of rejection following the unloading of produce the rejection was ineffective, and the load was deemed to have been accepted. The Lionheart Group, Inc. v. Sy Katz Produce, Inc., 59 Agric. Dec. 449 (2000).

WHEN UNLOADING IS NOT AN ACCEPTANCE

Where Complainant was notified prior to unloading and specifically requested an unrestricted inspection.  Under limited circumstances such as unloading for the purpose of inspection or to retrieve other produce from the nose of the truck, and where the product is then placed back on the truck within a reasonable time, unloading will not be deemed an acceptance.  Pope Packing & Sales v. Santa Fe Veg. Growers Coop. A’ssn., 38 Agric. Dec. 101 (1979).

PACA Trust Litigation Alert

PACA Trust Litigation Alert

PACA Trust Litigation Alert

On March 7, 2012, a civil action was filed in New Jersey against Depiero’s Farm, Inc. in an effort to collect approximately $85,300.00 in alleged PACA debt. 

On March 7, 2012, a civil action was filed in Washington against Cascade Ag. Services, Inc. d/b/a Pleasant Valley Farms in an effort to collect approximately $175,780.00 in alleged PACA debt. 

On March 8, 2012, a civil action was filed in Florida against Top Tomato Company in an effort to collect approximately $95,345.00 in alleged PACA debt. 

On March 8, 2012, a civil action was filed in New York against Produce Express Corp. in an effort to collect approximately $94,700.00 in alleged PACA debt. 

On March 14, 2012, a civil action was filed in Nevada against Lombardo Imports, Inc. d/b/a Lombardo Produce in an effort to collect approximately $726,161.42 in alleged PACA debt. 

On March 15, 2012, a civil action was filed in Illinois against J&S Produce Corp. in an effort to collect approximately $746,160.00 in alleged PACA debt. 

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

PACA Trust Litigation Alert

PACA Trust Litigation Alert

PACA Trust Litigation Alert

On March 2, 2012, a civil action was filed in Ohio against Meduri Brothers Produce, Inc. in an effort to collect approximately $30,000.00 in alleged PACA debt. 

On March 2, 2012, a civil action was filed in Maryland against German Town YK Group LLC d/b/a Super Q Mart in an effort to collect approximately $86,000.00 in alleged PACA debt. 

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

PACA Trust Litigation Alert

 
PACA Trust Litigation Alert
PACA Trust Litigation Alert

On March 1, 2012, a civil action was filed in Tennessee against Turnip Truck Urban Fare, LLC in an effort to collect approximately $128,300.00 in alleged PACA debt.

On February 29, 2012, a civil action was filed in California against G.D. Fresh Distribution, Inc. in an effort to collect approximately $21,400.00 in alleged PACA debt. 

On February 29, 2012, a civil action was filed in Miami against Cardile Brothers Mushroom Packaging, Inc. in an effort to collect approximately $22,600.00 in alleged PACA debt. 

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