Paul Horton: Enforcement of PACA Law

The PACA law is generally enforced either in a proceedings before the PACA branch of the USDA or in the United States District Courts. (The law does allow someone to seek a remedy in state courts, but in our experience very few buyers or sellers bring claims in state courts. Many state court judges are unfamiliar with PACA and its protections, for this reason we strongly suggest that our clients file their PACA court actions solely in federal courts and not in state courts.)

United States and Canadian sellers of produce– When should a party with a PACA claim file that claim with PACA branch of the USDA? Generally if a seller is claiming against a buyer, and the claim is a small claim, then the PACA branch of the USDA is a cost effective place to bring a claim. The total cost of filing a reparations proceeding with USDA is $600, $100 for the informal complaint and $500 for the formal complaint. It is difficult for a seller to bring a small claim, for example of $10,000, in a federal court in a cost effective manner, unless that claim is combined with the claim of another seller. It is very difficult for a party to hire a lawyer, pay the filing and attorney’s fees and proceed with the claim.
Foreign, non-Canadian shippers of produce– If a foreign produce shipper, not based in Canada, has a claim against a US produce merchant, the shipper has to make a decision regarding the claim. The seller cannot file a claim that proceeds to the second, formal complaint, stage before the PACA branch of the USDA unless the foreign seller posts a bond equal to double the amount of the claim filed. If a seller wants to file a $50,000, the seller must post a $100,000 bond. The bond may be made by depositing cash or by contracting with a surety company accredited by the United States treasury. For this reason, foreign, non-Canadian sellers rarely proceed to the second stage of reparations proceedings before the PACA branch of the USDA. These sellers usually file their claims in federal courts, where there is no double bond requirement.
How does the reparations process work in the USDA PACA branch?The first step of the process is commenced with the filing of an Informal Complaint with the USDA branch which covers the location where the buyer is based. The United States is divided into regions and the locations of the regional offices and the states and territories covered by each office is found on the USDA PACA webpage.

In the informal complaint, the party which makes the claim (the “complainant”) generally describes the problem it has with the other party to a produce transaction (the “respondent”) and describes why it believes that the other respondent’s conduct was improper under PACA. A sample informal complaint is found on the USDA PACA web page. The form found at this address is a fillable, online form that is easy to complete and print.

The complainant should attach any invoices, order confirmations, purchase orders and any other correspondence or contracts related to the transactions which are the subject of the informal complaint. The USDA PACA branch charges a fee of $100 for the filing of an informal complaint and the fee must be sent along with the informal complaint. The USDA accepts checks, VISA and Master Card.