If you have a problem getting payment from a buyer, or believe that you have suffered damages resulting from unfair trading practices, you should call a PACA office to discuss the matter. PACA representatives provide unbiased assistance—whether this involves interpreting a contract term, analyzing an inspection result, or providing general advice regarding your rights and responsibilities. Frequently, timely guidance such as this is sufficient to avoid any further action on your part. There are instances, however, when disputes are not so easily settled. In those cases, you will need to file a claim with a PACA office.
How to File a Claim
- The dispute must be over a contract involving fresh or frozen fruits and/or vegetables as defined by the PACA.
- The transaction must involve interstate or foreign commerce.
- The complaining party must establish that it suffered a monetary loss as a result of an action by the other party that is prohibited by the PACA.
- The party complained against must be licensed or operating a business that is subject to license.
- The complaint must be in writing and must be filed within 9 months from the date payment was due or the time that performance under the contract was required.
- The complaint must be accompanied by documentary evidence to support the claim, such as invoices, contracts, bills of lading, broker’s memoranda of sale, manifests, accountings, or any other evidence showing the nature of the contract.
Informal Claim - $100.00 filing fee, which can be paid by check or credit card. The complaint is not considered to have been filed until the payment has been received by the PACA Branch.
Formal Claim - $500.00 processing fee (may be recoverable)
Mediation of a Claim
PACA offers mediation services to anyone wishing to file a complaint. Mediation is an effective way to resolve disputes, since it places the resolution of the dispute directly in the hands of the interested parties. It provides an outlet for settling differences outside of the legal system, strengthens business relationships, and provides a forum where both parties can air their differences in a neutral atmosphere. Mediation sessions can be held face-to-face or over the telephone. All PACA personnel that handle disputes are trained in mediation, and can mediate your dispute upon request provided both parties are agreeable. There is no additional cost to mediate a dispute beyond the initial $100.00 filing fee.
Steps in Handling Informal Claims
Upon receipt of the required documentation, a PACA representative will review the claim to determine whether there is proper basis for a claim, and whether the dispute seems appropriate for mediation.
Once the claim is opened, the other party is contacted either regarding its willingness to mediate a resolution, or for its version of the dispute and supporting documentation. (If the complaint involves questions concerning the accuracy of an accounting, the matter may be scheduled for audit by a PACA representative without contacting the other party).
If mediation is refused or deemed inappropriate, given the specifics of the claim, both parties will be given the opportunity to explain their position and respond to the other party’s arguments. PACA will then offer an opinion as to the merits of the arguments made by the parties.
Using the informal opinion as a basis, the PACA representative will again attempt to negotiate an informal settlement with the parties.
If an informal settlement cannot be reached, the complaining party ("complainant") is given the opportunity to file a formal claim. PACA’s services as mediator are available at all stages up to the time the complete formal claim file is referred to the headquarters office.
Filing a Formal Claim
The formal claim must be submitted in an original and three copies according to the sample provided, along with the $500 processing fee. The formal claim is then served upon the opposing party ("respondent"), who is given twenty days from the date of receipt of the claim to file an answer. Any report of investigation prepared by USDA is also served upon the parties at this time.
A bond in double the amount of the claim must accompany formal claim filed by nonresidents of the United States. The bonding requirement may be waived if the country in which the complainant resides permits the filing of a complaint by a U.S. resident, without posting a bond. (Canada is the only country at present that meets this requirement).
Failure to file an answer within the time prescribed constitutes a waiver of hearing and an admission of the facts alleged in the claim, and will result in the issuance of a default order requiring the respondent to pay the amount claimed in the formal claim.
Filing an Answer
The answer should be filed in triplicate and should include either:
- A precise statement of the facts that constitute the grounds of defense, including any set-off or counterclaim, and a specific admission, denial, or explanation of each of the allegations of the complaint, unless the respondent is without knowledge, in which case the answer should so state; or
- A statement that the respondent admits all of the allegations of the complaint; or
- A statement containing an admission of liability in an amount less than that alleged in the formal complaint, and a denial of liability for the remainder.
Note: If the answer includes a counterclaim, a $500.00 handling fee is also required.
Admission of Liability
If the contents of the answer include an admission of liability for an amount less than the amount of the complaint, the USDA may issue an order requiring the respondent to pay the undisputed amount.
Oral Hearings v. Documentary Procedure
When the amount of damages claimed, either in the complaint or counterclaim, exceeds $30,000.00, either party may request an oral hearing. If an oral hearing is not requested, or when the amount of damages claimed is less than $30,000.00, the matter will proceed pursuant to the documentary procedure provided in the Rules of Practice.
Oral Hearing Procedure—A Brief Overview
Prior to scheduling the hearing, the parties are given the opportunity to file deposition and/or subpoena applications.
After the time for filing applications has expired and the depositions have been taken and/or the subpoenas have been served, the examiner will set a time and place for the hearing. Note: Hearings are typically held near the place of business of the respondent.
Prior to the close of the hearing, or within 20 days thereafter, each party may file a claim for fees and expenses incurred in connection with the oral hearing.
A transcript of the testimony at the hearing is prepared and submitted, with exhibits attached, to the examiner for the preparation of a report.
The examiner prepares a report in the form of a final order either awarding damages to the claimant or dismissing the complaint, as the circumstances may warrant.
Under the documentary procedure, the pleadings of the parties, if verified (see below), and any report of investigation prepared by the Department are considered evidence in the proceeding. In addition, the parties are given the opportunity to file the following:
Complainant’s opening statement. Within 20 days after service of respondent’s answer, complainant may file a verified opening statement accompanied by any pertinent documents, which must be identified in the statement. If the answer is verified, Complainant’s evidence concerning the allegations of the answer should be included in the opening statement.
Respondent’s answering statement. Within 20 days after service of complainant’s opening statement or service of notice by USDA that complainant has not filed an opening statement, respondent may file a verified answering statement accompanied by any pertinent documents, which must be identified in the statement.
Complainant’s statement in reply. If respondent files an answering statement, complainant may, within 20 days after service thereof upon complainant, file a verified statement in reply, accompanied by any pertinent documents, which must be identified in the statement.
Briefs. After the conclusion of the presentation of evidence, USDA will notify the parties that they may file briefs within 20 days after the receipt of such notice. The brief is for the purpose of discussing the evidence previously provided and to give the presiding officer guidance concerning the legal issues. The brief, even if sworn to, is not considered evidence under the documentary procedure, and new evidence may not be offered in the brief.
Note: Any time that you are making a claim or responding to a claim, your complaint, answer and statements should be sworn to and notarized if it is to carry any evidentiary weight.
After the time for filing briefs has expired, the examiner prepares a report in the form of a final order either awarding damages to the claimant or dismissing the complaint, as the circumstances may warrant.
Reconsideration of Orders
A petition to reconsider an order must be filed with the hearing clerk within 20 days from the date of service of the order. The petition must state specifically the matters claimed to have been erroneously decided and the alleged errors. The filing of a petition automatically sets aside the order pending final action on the petition.
Unpaid Awards/Sanctions/License Suspension
Licensees are given 30 days from the date of the order to either make payment in full as required by the order, or to file an appeal. Unless a licensee shows to the satisfaction of the USDA within 5 days from the expiration of the period allowed for compliance with the order, that it has either paid the award or filed an appeal, its license will automatically be suspended. The suspension will remain in effect until the award is paid. (In the case of an appeal, if the appellee prevails or the appeal is dismissed, the automatic license suspension becomes effective 30 days from the date of judgment on appeal.)
Enforcement of Reparation Awards and Sanctions
If a reparation award remains unsatisfied and becomes final, PACA sanctions are automatically imposed. The winner of the award may, within 3 years of the date of the order file in the nearest U.S. District Court to have the award reduced to a court judgment requiring payment. If the judgment is not satisfied, the offending firm will then be subject to the penalties available to that court, which can include attachment of assets.
The PACA Branch monitors the commercial activities of the offending firm and its principals to assure that they do not violate the PACA sanctions by continuing to operate in the fruit and vegetable trade. If the firm continues to violate the sanctions, the PACA Branch will gather and provide evidence to the U.S. Attorney’s office, which has the authority to file a request for monetary penalties and/or a permanent injunction against the firm.
Right of Appeal
Either party adversely affected by a reparation order may, within 30 days from the date of issuance of the order, file an appeal in the U.S. District Court for the district where the hearing was held, if applicable, or, if the complaint was handled under the documentary procedure, the district where the respondent is located. Filing the following with the district court clerk perfects the appeal:
- A petition in duplicate citing the prior proceedings before the USDA and the grounds upon which the petitioner is relying to defeat the right of the opposing party to recover the damages claimed;
- Proof of service of the petition upon the opposing party; and
- A bond in double the amount of the reparation award conditioned upon the payment of the judgment entered by the court, plus interest and costs, including a reasonable attorney’s fee for the appellee, should the appellee prevail.
The suit in district court proceeds in all respects like other civil suits, except that the findings of fact and order(s) issued by USDA are prima facie evidence of the facts stated there.
Verification of any complaint, answer, statement, or affidavit should be made under oath of any facts set forth in the pleading or statement, by the person who signed the pleading or statement. The form of verification used should be essentially as follows:
_____________________, being first duly sworn, says that he/she has read the foregoing document and knows the contents thereof and that the facts set forth therein are true, except as to matters therein stated on information and belief, and as to such matters he/she believes them to be true, and that he/she is authorized to sign the document. Subscribed and sworn to before me this day of ___________________.
If you have any questions regarding this course material, please direct them to John Koller, Director, Dispute Resolution Section, PACA Branch, Washington DC; phone 202-720-1442, or via email at firstname.lastname@example.org