The following summaries of precedent-setting reparation decisions issued under the Perishable Agricultural Commodities Act (PACA) are intended to help companies understand their rights and responsibilities under PACA. The key facts and core reasoning used to decide cases are presented.
TOPIC: ADEQUACY OF ACCOUNTING
U.S. Gateways, Inc.
(Cedarhurst, NY)
v.
Finest Fruit, Inc.,
(Bronx, NY)
45 A.D. 2430 Decided November 6, 1986
Finest Fruits, Inc. (Finest Fruits) received four shipments of mixed produce including peppers, okra, and two shipments of melon on consignment from U.S. Gateways, Inc. (Gateways) between March 23, 1984 and April 9, 1984.
Finest Fruits sent Gateways checks totaling $7,587.02 for all four shipments, along with detailed accountings in support of their returns. Finest Fruits did not allege there were quality or condition problems with the produce, nor did they have the produce inspected.
After reviewing the accountings, Gateways filed an informal complaint with PACA challenging the low returns. The subsequent PACA investigation found that Finest Fruits had sold product that it claimed to have dumped. Of the original 3,861 cases of melon received, Finest Fruits reported 1,090 were dumped, yet sales receipts showed 193 of the cases that were reported dumped, were in fact sold.
Furthermore, the investigation revealed that Finest Fruits failed to provide an inspection certificate, or other proof, showing that the remaining 897 cases, which were reportedly dumped, were without commercial value.
Accordingly PACA adjusted Gateways’ returns by imputing a selling price to the missing melon equal to the average sales price for the melons that were sold, as indicated by the accounting.
Before dumping more than 5 percent of produce handled on consignment, PACA explained, the consignee must either obtain an inspection showing the product is without commercial value or obtain written permission from the consignor.
Hence PACA found that Finest Fruits had failed to truly and correctly account to the claimant in violation of Section 2 of the Act. Gateways was awarded payment of $2,808.40, plus interest.
These summaries are not issued by the USDA, nor the PACA Branch, and should not be mistaken for an official government statement or release.
