Opinion
01 Civ. 2494 (LLS).
December 12, 2001.
Opinion and Order
This is an appeal by Koam Produce, Inc. ("Koam") from a November 16, 2000 reparation award rendered by the United States Department of Agriculture ("USDA") against Koam and in favor of DiMare Homestead, Inc. ("DiMare"). Koam now moves to vacate that award, claiming that the USDA Judicial Officer was disqualified to hear the case, due to the USDA's conflict of interest.
Background
USDA fruit and vegetable inspectors independently evaluate the quality of produce shipped to the Hunts Point Market in the Bronx, and their determinations are the basis for adjustments in the purchase price of the produce if its quality is found to be below that specified in the supplier's and wholesaler's contract.
In October 1999, nine USDA inspectors were arrested and later pleaded guilty to accepting bribes from wholesalers' employees in exchange for reducing the grade of produce that they inspected, allowing the wholesalers to pay a lower price for acceptable goods. Marvin S. Friedman, an employee of Koam (a wholesaler who purchased from suppliers such as DiMare), pleaded guilty to bribing inspectors who had inspected produce at Koam's place of business.
In the statutory reparation proceeding which is the subject of this appeal, DiMare claimed Koam improperly obtained lowered prices. Although there was no showing that the bribed inspectors falsified the results in any specific lots of tomatoes involved in the USDA reparation proceeding, the USDA Judicial Officer set aside the price adjustments which Koam had negotiated with DiMare (the seller of the tomatoes) and awarded DiMare the full contract price, on the theory that
Whether the individual inspections involved in this proceeding were falsified is immaterial for our purposes. . . . [Koam's] non-disclosure of [its] involvement [in bribing the inspectors] was, therefore, equivalent to an assertion that no such bribery had taken place, and was a misrepresentation for which the adjustment agreements may be voided.
USDA Decision and Order, Nov. 16, 2000, at 11.
In its appeal, Koam urges that the Judicial Officer's ruling, which in effect sets aside all inspections made by the inspectors convicted of taking bribes — regardless of whether there is any evidence of falsification in the particular inspection in question — imposes a new and unacceptably strict standard of liability on the produce purchasers whose employees bribed the inspectors or knew of the bribery.See Pet. Memo. dated Oct. 23, 2001, p. 3. On the instant motion Koam argues more narrowly that
the Secretary should have been disqualified from even hearing the reparation complaint because of an unwaivable conflict, to wit: at the time of the reparation hearing, the plaintiff in that action, DiMare, had actionable claims against the USDA directly related to the subject matter of the complaint, the taking of bribes by the nine USDA inspectors at the Hunts Point Market. The reparation action, therefore, placed the Secretary in a position where he was called upon to find Koam liable for the same damages for which he could be found liable.Id. at 3-4.
Discussion
The Perishable Agricultural Commodities Act of 1930, 7 U.S.C. § 499aet seq., provides that claims such as DiMare's may be enforced by complaint to the Secretary (as well as by lawsuit). See 7 U.S.C. § 499e(b). If he determines there was a violation, the Secretary shall direct reparation, see id., § 499f-g, subject to review in a district court, see id., § 499g.
Koam claims that the Judicial Officer should have recused himself under 28 U.S.C. § 455(b), which describes circumstances in which a federal judge is disqualified from hearing a particular case. That section does not apply to the reparation proceeding. It dictates that a judge shall disqualify himself when he has a personal conflict with the case before him. Such personal conflicts include personal knowledge of facts, personal involvement in the case as a lawyer in the past, a financial interest in the subject matter or his spouse's or minor child's financial interest, and a personal relationship with a party or lawyer in the case. See 28 U.S.C. § 455(b). Koam does not claim that the particular Judicial Officer in this case had a personal disqualification, but rather that the entire USDA had a conflict of interest. Thus, section 455(b) is inapplicable.
Koam also argues that the Judicial Officer should have declined to adjudicate the complaint based on the USDA's conflict of interest. Administrative law judges, however, routinely review actions taken by their agencies. As stated in Greenberg v. Bd. of Governors of the Federal Reserve System, 968 F.2d 164, 167 (2d Cir. 1992):
Instead, [plaintiffs] argue that the mere appearance of impropriety is sufficient to require the ALJ to recuse himself. Had this case been tried before a federal district judge, this might be a plausible argument. Under 28 U.S.C. § 455(a), a federal judge must recuse herself `in any proceeding in which [her] impartiality might reasonably be questioned.' That high standard of propriety applies, however, only to Supreme Court justices, magistrate judges, and `judges of the courts of appeals, district courts, Court of International Trade and any court created by Act of Congress, the judges of which are entitled to hold office during good behavior.' 28 U.S.C. § 451. The heightened standard cannot apply to administrative law judges who, after all, are employed by the agency whose actions they review. Otherwise, ALJs would be forced to recuse themselves in every case.
Instead, we think the Greenbergs' charge must be judged under the standards imposed on ALJs by the Administrative Procedure Act (APA), 5 U.S.C. § 554(d). That section requires that `[a]n employee or agent engaged in the performance of investigative or prosecuting functions for an agency in a case may not, in that or a factually related case, participate or advise in the decision. . . .'
Thus the involvement of USDA inspectors in the bribery scheme, even if it gave rise to liability on the part of USDA, was not a reason for the Judicial Officer to recuse himself.
"[D]ue process demands impartiality on the part of those who function in judicial or quasi-judicial capacities" in administrative agencies.Schweiker v. McClure, 102 S.Ct. 1665, 1670 (1982). There is a presumption, however, that administrative judicial officers are unbiased.See id. Nothing suggests that the particular Judicial Officer who presided over the reparation hearing was individually disqualified.
CONCLUSION
The motion to vacate the reparation award based on the USDA's alleged conflict of interest is denied.
So ordered.