“[W]e find that the payment and interest charge provisions in Complainant’s invoices were incorporated into the parties’ sales contracts. Our decision is consistent with the application of Section 2-207(2) by federal courts that have been confronted with similar provisions on produce invoices. See, e.g., Coosemans Specialties, Inc. v. Garguilo, 2007 (invoice clauses providing for attorneys’ fees were incorporated into the parties’ contracts pursuant to 2-207); Ruby Robinson Co., Inc. v. Kalil Fresh Marketing, Inc. (S.D. Tex 2009) (attorneys’ fees provisions in invoices were incorporated into the parties’ contracts pursuant to 2-207); Senn Bros., Inc. v. Foothills Meat and Produce, Inc. (W.D. N.C. 2008) (terms included on seller’s invoices became binding on the parties pursuant to 2-207); Dayoub Marketing, Inc. v. S.K. Produce Corp. (S.D. N.Y. 2005) (interest and collection costs provisions in seller’s invoices were incorporated into the parties’ contracts, subject to a limitation of reasonableness, pursuant to 2-207); Fleming Companies (D. Del. 2004) (attorneys’ fees provisions on invoices enforceable pursuant to 2-207). Service charge and attorneys’ fee clauses have become commonplace on produce invoices because many federal courts have determined that these fees are recoverable in PACA trust actions pursuant to 7 U.S.C. § 499e(c)(2). See, e.g., Middle Mountain Land and Produce Inc. v. Sound Commodities Inc. (9th Cir. 2002); Consumers Produce, Inc. v. R. Family Market (N.D. Ohio 2009); JC Produce, Inc. v. Paragon Steakhouse Restaurants, (E.D. Ca. 1999).
Paradoxical Findings
While it is not entirely clear why the USDA refuses to follow judicial precedent in awarding a prevailing party in a reparation proceeding its attorneys’ fees, when a supplier’s invoices include language specifying that a prevailing party should recover such fees, its propensity to award contractual interest has made a big difference to complainants who may have to wait many months or even years to obtain a decision. Without the verbiage on the invoices regarding late fees or interest, the Complainant would have been relegated to the federal interest rate, which was 0.29% at the time of the Johnston Farms decision.
Similarly, in Skolnick, Inc. dba Imperial Frozen Foods v. California Fruit Markets (2008), the USDA awarded 18% interest based on the Complainant’s invoices. Interestingly, the 18% interest rate was held to apply until such time as the award was paid, so the federal judgment rate never came into play. Likewise, in Underwood & Wong Produce v. Rosedem, Inc. (2013), a default order, the USDA adopted the interest rate shown on the complainant’s invoices (18%), but it also determined that the 0.12% federal interest rate would apply after the date of the Order until paid. Again, the Secretary noted, “in the absence of a timely objection by Respondent the interest charge provisions on Complainant’s invoices were incorporated into each sales contract.”
The USDA’s own rationale (based upon the invoice language) applied in the Johnston Farms case reveals an incongruous and illogical distinction between invoice language pertaining to interest on one hand and attorneys’ fees on the other. There is simply no plausible legal basis for ignoring the language on an invoice pertaining to the recovery of attorneys’ fees expended by a party to obtain a recovery, especially when the Secretary does not hesitate to award interest based upon precisely the same platform relied upon by complainants seeking to recoup their attorneys’ fees—the invoice.
