Of course, the downside to this language is that it refers to the “prevailing party,” although the language can be changed to “the grower” or “the supplier.” The words “prevailing party” mean that should a supplier bring a legal action against a buyer and lose, the supplier may be responsible for the buyer’s attorneys’ fees. In addition, in some states, including California, the winner in a legal action will collect attorneys’ fees if there is contractual language providing for an award of these fees to either party, because the obligation is made reciprocal by statute.
Specific Cases
In reparation proceedings, the U.S. Department of Agriculture (USDA) has finally followed the lead of federal courts and has begun routinely awarding pre-judgment interest at the rates stated on invoices. This is quite significant as it often makes a HUGE difference in the amount awarded to the Complainant in reparation damages.
In cases in which there is no interest rate specified in the sales documentation, the default interest rate is substantially less than 1% based upon the applicable federal interest rate. Thus, if a complainant waited two years to obtain a reparation award finding that it was entitled to $50,000 in damages, the complainant would be awarded another $18,000 in late fees in addition to the $50,000 damages found due, assuming its invoices provided for a monthly late charge of 18% per year on all delinquent balances due.
In United Greenhouse LLC v. Premium Valley Produce, Inc. (2013), for example, United Greenhouse sought to recover $14,340 for cucumbers sold to Premium Valley. The USDA awarded 18% interest based on the Complainant’s invoices through the date of the decision, but set a meager 0.12% per annum as the applicable interest rate after the issuance, which was presumably based upon the federal judgment interest rate at the time. In United Greenhouse, the USDA stated:
“Complainant seeks pre-judgment interest on the unpaid amount due for the mini cucumbers at a rate of 1.5% per month (18% per annum). Complainant’s claim is based on its invoice to Respondent which bears the statement: ‘Interest shall accrue on any past-due account balance at the rate of 1.5% per month on any past-due balance at the rate of 1.5% per month (18% per annum).’ There is nothing to indicate that Respondent objected to the interest charge provision state on Complainant’s invoice. In the absence of a timely objection by Respondent, the interest charge provision stated on Complainant’s invoice becomes incorporated into the sales contract. See UCC § 2-207. The 1.5 percent per month, 18 percent per annum, rate of pre-judgment interest set by Complainant’s invoice to Respondent is not unreasonable. Numerous courts have awarded pre-judgment interest at a rate of 18% based on similar contract provisions.”
In another PACA reparation decision, Johnston Farms v. AG Grower Sales LLC (2010) the Secretary awarded 18% interest when the language appeared on the invoice. In deciding to award interest at the rate specified on the invoice, the USDA relied heavily upon case law in which courts awarded attorneys’ fees based on the supplier’s invoices:
