On October 15, 2014, the Business Development Institute will host a Social Media Marketing Summit for Law Firms in Chicago. This half-day event will feature a variety of speakers who will share case studies and lessons learned from leading law firms about how they use social media and content marketing to highlight expertise, build business and expand relationships with existing clients. Among the speakers, Jason Klinowski and Christina Solomon of Freeborn & Peters LLP will discuss The Fresh Facts Blog and how Jason uses social media as a marketing channel for his agricultural and food law practice.
Tag Archives: produce lawyer
PACA Trust Litigation Alert
On January 10, 2014, a civil action was filed in California against Sunfresh USA, Inc. to collect approximately $389,000 in alleged PACA trust debt.
On January 10, 2014, a civil action was filed in North Carolina against Nichols Foodservice, Inc. to collect approximately $204,000 in alleged PACA trust debt.
On January 14, 2014, a civil action was filed in Maryland against Five Days Market, Inc. t/a G Mart International to collect approximately $114,000 in alleged PACA trust debt.
On January 16, 2014, a civil action was filed in Illinois against T&T Food Service, Inc. a/t/a T&T Foodservice, Inc. to collect approximately $90,000 in alleged PACA trust debt.
On January 16, 2014, a civil action was filed in New Jersey against Rockaway Green Farmers Market LLC to collect approximately $38,000 in alleged PACA trust debt.
On January 16, 2014, a civil action was filed in New York against Global Tropical Fresh Fruit Corp. to collect approximately $349,000 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 assert your rights.
Jason Klinowski to Serve as Special PACA Counsel to Allens Canning During its Chapter 11 Bankruptcy Case
On October 28, 2013, Allens, Inc. d/b/a Allens Canning (the “Debtor”) filed for Chapter 11 bankruptcy protection. Anticipating over $20 million in potential PACA claims, the Debtor retained Jason Klinowski of Freeborn & Peters LLP’s food industry team to serve as special PACA counsel. In this capacity, Jason assisted the Debtor in the preparation of the PACA claims procedure order and now manages the Debtor’s obligations under the order. To be clear, the PACA claims procedure order is a Court approved procedure by which the Debtor and all potential PACA trust beneciaries test the validity of the PACA claims.
In the Courtroom, Jason also helps the Debtors address such complex PACA trust issues as:
- Whether the Court Should Compel the Debtor to Create and Fund a Segregated PACA Trust Account (NO)
- Whether the Debtor May Use PACA Trust Assets in Connection With its Efforts to Reorganize Under Chapter 11 of the Bankruptcy Code (YES)
- The Proper Use of Pre-Transaction Written Agreements to Limit PACA Trust Liability (to be determined)
- And more…
The Debtor’s Chapter 11 case not only involves significant amounts of potential PACA trust liability, but it also contains several complex PACA trust issues, the resolution of which could change how the produce industry does business.
PACA Trust Litigation Alert!
On October 8, 2013, a civil action was filed in Florida against High Point Marketing of NJ, Inc. to collect approximately $30,000 in alleged PACA trust debt.
On October 10, 2013, a civil action was filed in New York against Isadore A. Rapasadi and Sons, Inc. to collect approximately $96,000 in alleged PACA trust debt.
On October 11, 2013, a civil action was filed in New Mexico against Duke City Produce, Inc. to collect approximately $129,000 in alleged PACA trust debt.
On October 14, 2013, a civil action was filed in Ohio against JAO Distributors, Inc. d/b/a Gentile Bros. Company to collect approximately $138,000 in alleged PACA trust debt.
On October 16, 2013, a civil action was filed in California against IBC Produce, Inc. to collect approximately $30,000 in alleged PACA trust debt.
On October 24, 2013, a civil action was filed in Florida against PNL Produce LLC d/b/a Watson’s Produce to collect approximately $9,000 in alleged PACA trust debt.
On October 25, 2013, a civil action was filed in Florida against both Sergio Felipe Produce Corp. and First Coast of Miami LLC to collect approximately $180,000 in alleged PACA trust debt.
On October 25, 2013, a civil action was filed in Pennsylvania against Andrew DePoala Mushrooms, Inc. to collect approximately $188,000 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 assert your rights.
PACA Trust Litigation Alert!
On September 24, 2013, a civil action was filed in New York against YCK LLC d/b/a Cross Island Super Foods to collect about $154,000.00 in alleged PACA trust debt.
On September 27, 2013, a civil action was filed in California against Hayes Produce Marketing LP to collect about $68,000.00 in alleged PACA trust debt.
On September 27, 2013, a civil action was filed in Virginia against Andrews Farming LLC to collect about $88,000.00 in alleged PACA trust debt.
Please check your A/R to see if theses cases affect you. If they do, please do not wait to assert your rights.
Government Not Required to Prove Intent or Consciousness of Wrongdoing to Convict the Jensen Brothers
As the produce industry follows the fate of Eric and Ryan Jensen many articles and commentary have surfaced in support of the brothers Jensen. However, these articles and commentary all focus around a significant misconception about the government’s burden of proof. Specifically, the general misconception is that the U.S. Attorney’s Office must prove or otherwise show intent on the part of the Jensen brothers to obtain a criminal conviction. This is wrong!
The Federal Food Drug and Cosmetic Act (“FD&C Act”) protects the consuming public by allowing the government to regulate the conditions under which food and drugs are manufactured and distributed and it requires those responsible to comply with its provisions. Under the FD&C Act, misdemeanor criminal responsibility does not require intent or consciousness of wrongdoing. On the other hand, felony criminal responsibility requires a knowing violation with the specific intent to defraud or mislead. The FD&C Act also states that a corporation may commit an offense and all persons who aid and abet its commission are equally guilty.
The Jensen brothers are facing misdemeanor criminal charges, which still carry the threat of imprisonment and significant financial penalties. Given the misdemeanor nature of the charges, the U.S. Attorney’s Office does not need to allege or prove any type of intent on the part of the Jensen brothers to obtain a criminal conviction.
The foregoing is but one example of why the Jensen brothers’ criminal case is alarming to the produce industry. With that said, are there any real and meaningful defenses available to the Jensen brothers? The answer is yes!
Fresh & Easy Neighborhood Market, Inc. Files for Chapter 11 Bankruptcy Protection
On September 30, 2013, Fresh & Easy Neighborhood Market, Inc. filed for chapter 11 bankruptcy protection in the District of Delaware and was assigned case number 13-12569. The Debtor’s voluntary petition estimates: (i) between 10,000 and 25,000 creditors; (ii) holding assets valued between $100 million and $500 million, and; (iii) liabilities between $500 million and $1 billion dollars. This case was assigned to Judge Kevin J. Carey.
A review of the first day motions shows the Debtor has already filed a Motion to Pay PACA/PASA claims and are seeking permission from the Court to use $5,000,000.00 (in the aggregate) to pay all the PACA/PASA claims. In addition, the Debtor is asking for a court order directing the Debtor’s bank to honor all checks presented for payment. In addition to several other motions, the Debtor filed a 305 page list of creditors.
Please check back for updates. I will update this entry further after I review the first day pleadings more fully and additional pleadings are filed.
Jason Klinowski to Speak at the Upcoming Food Regulatory Compliance Summit in Chicago
On October 4, 2013, Jason Klinowski will join Daniel Shaw – Vice President, Deputy General Counsel at H.J. Heinz Company – to address food recalls and to discuss practical tips and best practices for preventing common pitfalls and minimizing downstream litigation exposure. Please join us at theWit for this two-day conference and connect with food industry leaders from The Hillshire Brands Company, Kellogg, US Foods, Nestle, MOM Brands, Cargill, H.J. Heinz Company, and others.
An “Open Price” Sale or “Price After Sale” is Still a Sale Requiring Prompt Payment Within 10 Days of Delivery
Neither the UCC nor the PACA recognize the term “Price After Sale.” The term is a subcategory of “Open Price.” A.P.S. Marketing, Inc. v. R.S. Hanline & Co., Inc., 59 Agric.154 Dec. 407 (2000), Sucasa Produce v. A.P.S. Marketing, Inc., 59 Agric. Dec. 421 (2000), and Well Pict, Inc. v. Ag-West Growers, Inc., 39 Agric. Dec. 1221, 1227-1228 (1980). See Eustis Fruit Co., Inc. v. The Auster Co., Inc., 51 Agric. Dec. 865 at 877 (1991) (“The term “price after sale” usually contemplates the parties agreeing to a price following the prompt resale of the produce.); Bonanza Farms, Inc. v. Tom Lange Co., Inc., 51 Agric. Dec. 839 at 846 (1991); M. Offutt Co., Inc. v. Caruso Produce, Inc., 49 Agric. Dec. 596 (1990). This fact becomes important because the regulations (other than the rules of practice) under PACA (7 CFR Part 46) (the “Regulations”) do not place a duty to account upon a buyer who purchases on an open basis. Ronnie Carmack v. Delbert E. Selvidge, 51 Agric. Dec. 892 (1992) (emphasis added).
Why is this important to a produce supplier?
As the industry knows, “a PACA supplier must [sell] produce on a cash or short-term credit basis.” Patterson Frozen Foods, Inc. v. Crown Foods International, Inc., 307 F.3d 666, 669 (7th Cir. 2002). As a matter of fact, the Secretary of Agriculture has determined that ‘the maximum time for payment for a shipment to which [parties] can agree and still qualify for coverage under the trust is 30 days after receipt and acceptance.’” 7 C.F.R. § 46.46(e)(2) (emphasis added). Taken together, PACA and the Regulations provide both parties to a sales transaction with the ability to calculate the seller’s last day to perfect its PACA trust rights with the level certainty needed to ensure the credit agreement does not exceed the statutory maximum of 30 day terms.
The Regulations state, in relevant part, that “[f]ull payment promptly’ for the purpose of determining violations of [PACA], means: [p]ayment for produce purchased by a buyer, within 10 days after the day on which the produce is accepted.’” 7 C.F.R. §46.2(aa)(5) (emphasis added). Once the seller delivers its produce to the buyer, both parties possess the immediate ability to calculate two important dates. The first date is the payment due date, which is generally 10 days later.
The second critical date is the seller’s last day to perfect PACA trust rights, which is within 30 calendar days after the expiration of the time prescribed by which payment must be made as set forth in the Regulations. See 7 U.S.C. §499e(c)(3)(i). This means the seller has a 40 calendar days (10 day payment terms + 30 days thereafter to perfect) in which to preserve its PACA trust rights.
A Seller who sells produce with “Open Price” terms or “Price After Sale” terms must preserve its PACA trust rights within 40 days pursuant to 7 C.F.R. §46.2(aa)(5) and 7 U.S.C. §499e(c)(3)(i). This is true even if the parties have not agreed upon a price or the buyer has not provided any type of account of sale. Remember, the buyer in an “Open Price” term contract has no duty to provide the seller with an account of sale because the sales contract becomes valid and binding as soon as the produce is accepted. Also, the uniform commercial code will not allow an otherwise valid and binding contract to fail simply because there either is no agreement on price or there is a dispute as to the price term. See UCC Section 2-305.
Important Take Away: Seller Beware!
An unpaid seller of produce CANNOT sit back and wait for the resolution of any missing price term before it acts to perfect its PACA trust rights. The clock starts ticking on the seller’s ability to preserve its PACA trust rights as soon as the produce is accepted. The failure of the buyer to provide an accounting or the inability of the parties’ to agree upon the proper price will not toll, delay or otherwise modify the calculation of the seller’s last day to preserve its PACA trust rights.
PACA Trust Litigation Alert!
On September 6, 2013, a civil action was filed in California against J.D. Produce, Inc. in an effort to collect approximately $54,000.00 in alleged PACA trust debt.
On September 9, 2013, a civil action was filed in New York against New A & N Food Market, Inc. in an effort to collect approximately $36,000.00 in alleged PACA trust debt.
On September 13, 2013, a civil action was filed in Colorado against Mi Pueblo Latin Market, Inc. t/a Mi Pueblo Market in an effort to collect approximately $202,000.00 in alleged PACA trust debt.
On September 19, 2013, a civil action was filed in New Jersey against Dandrea Produce, Inc. in an effort to collect approximately $600,000.00 in alleged PACA trust debt.
On September 19, 2013, a civil action was filed in Ohio against Arena Produce Co., Inc. in an effort to collect approximately $54,000.00 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 assert your rights.