H.c. Macclaren, Inc. v. United States Department of Agriculture

*The Honorable William W Schwarzer, Senior United States District
Judge for the Northern District of California, sitting by designation.
1
RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2003 FED App. 0319P (6th Cir.)
File Name: 03a0319p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
H.C. MACCLAREN, INC.,
Petitioner,
v.
UNITED STATES DEPARTMENT
OF AGRICULTURE,
Respondent.
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No. 02-3006
On Appeal from an Order of the Secretary,
United States Department of Agriculture.
No. D-99-0012.
Argued: June 11, 2003
Decided and Filed: September 4, 2003
Before: MOORE and GIBBONS, Circuit Judges;
SCHWARZER, Senior District Judge.*
2 H.C. MacClaren, Inc. v.
United States Dep’t of Agric.
No. 02-3006
_________________
COUNSEL
ARGUED: Stephen P. McCarron, McCARRON & DIESS,
Washington, D.C., for Petitioner. Stephen M. Reilly,
OFFICE OF GENERAL COUNSEL, UNITED STATES
DEPARTMENT OF AGRICULTURE, Washington, D.C., for
Respondent. ON BRIEF: Stephen P. McCarron,
McCARRON & DIESS, Washington, D.C., for Petitioner.
Stephen M. Reilly, OFFICE OF GENERAL COUNSEL,
UNITED STATES DEPARTMENT OF AGRICULTURE,
Washington, D.C., for Respondent.
_________________
OPINION
_________________
JULIA SMITH GIBBONS, Circuit Judge. Petitioner H.C.
MacClaren, Inc. (MacClaren), a wholesale produce broker,
appeals a final order of the Secretary of Agriculture revoking
its license pursuant to the Perishable Agricultural
Commodities Act (PACA), 7 U.S.C. §§ 499a-499s. The
Secretary determined that the sanction of license revocation
was appropriate after concluding that MacClaren had
committed sixty-one violations of PACA. Specifically,
MacClaren employees admitted to altering fifty-three United
States Department of Agriculture (USDA or “the agency”)
inspection certificates and issuing eight false accounts of sale
for a fraudulent purpose. MacClaren contends that in
imposing the sanction of license revocation, the Secretary
erred in failing to consider the remedial purpose of PACA and
all relevant circumstances and imposed a sanction that is
without justification in fact. For the reasons set forth below,
we affirm the decision of the Secretary.

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No. 02-3006 H.C. MacClaren, Inc. v.
United States Dep’t of Agric.
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I.
MacClaren began doing business in the 1920s and was
issued a PACA license in 1974. Since 1974, MacClaren’s
license has been renewed annually. MacClaren operates out
of Detroit, Michigan, and is owned and managed by Gregory
MacClaren, president, director and fifty-one percent
stockholder, and Darrell Moccia, vice-president, director, and
forty-nine percent stockholder. In addition to Gregory
MacClaren and Darrell Moccia, during the relevant time
period MacClaren employed four salespersons, Norman Olds,
Alan Johnston, Frederick Gottlob and Daniel Schmidlin, who
were paid on commission. All six individuals purchased
fruits and vegetables (perishable commodities) from shippers
throughout the country and resold the produce to local jobbers
and wholesalers. They worked in the same area with raised
dividers separating their desks and together handled about
400 transactions per month.
Prior to the violations at issue, MacClaren had no record of
violations of PACA. During 1994 through 1996, however,
three MacClaren employees committed sixty-one violations
of PACA. Olds, Johnston and Gottlob admitted to altering
fifty-three inspection certificates resulting in underpayments
totaling $130,903.00 to twenty-two suppliers. In addition,
Olds and Gottlob admitted to issuing eight false accounts of
sale to seven suppliers resulting in underpayments of
$6,599.15.
The admissions by MacClaren employees resulted from the
investigation of another company suspected of altering
inspection certificates. In December 1996, USDA
investigators visited MacClaren to examine MacClaren’s file
relating to a transaction with the company under
investigation. Upon examining the file, the investigators
discovered two copies of the same USDA inspection
certificate containing conflicting entries. Neither Gregory
MacClaren nor Darrell Moccia could explain the discrepancy.
4 H.C. MacClaren, Inc. v.
United States Dep’t of Agric.
No. 02-3006
1The USDA concedes that MacC laren repaid “most but not all of the
unde rpaym ents.”
The investigators then reviewed thirty-six files and found
discrepancies in eleven of the files handled by Olds, Gottlob
and Johnston.
Gregory MacClaren and Darrell Moccia denied knowledge
of the alterations and told investigators that they wanted to
cooperate and investigate the matter internally. They initiated
an internal review and had their employees review all past
files for altered inspection certificates. The internal
investigation uncovered numerous additional altered
inspection certificates which Gregory MacClaren and Darrell
Moccia turned over to investigators. Olds, Gottlob and
Johnston voluntarily gave statements to the investigators
admitting that they had altered USDA inspection certificates
and denying that Gregory MacClaren or Darrell Moccia were
aware of their actions. Gottlob also admitted to issuing seven
false accounts of sale, and Olds admitted to issuing one such
false account.
Gregory MacClaren personally contacted the suppliers
affected by the altered inspection certificates and false
accounts to express MacClaren’s intent to make restitution.
According to MacClaren, the company returned almost one
hundred percent of the amounts it underpaid shippers as a
result of the alterations and false accountings.1
Despite their admissions of improper conduct, MacClaren
continued to employ Olds and Gottlob on the condition that
they reimburse MacClaren for the restitution that it intended
to pay the shippers. In addition, Olds and Gottlob were
directed to call each shipper affected by the altered inspection
certificates, explain their actions and advise the shipper that
MacClaren intended to make restitution for any losses the
shipper suffered. Olds continued working for MacClaren, and

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2Gottlob obtained immunity from criminal prosecution in return for
his testimony at the USD A hearing. Olds testified at the hearing, but did
not rec eive immunity.
through paycheck deductions he reimbursed MacClaren for
the restitution on the inspection certificates he altered.
Gottlob, however, only continued working for MacClaren for
about a month and a half until he was terminated for poor
work performance. Gottlob did not repay MacClaren any of
the restitution amount.
On June 17, 1999, the USDA issued a complaint charging
MacClaren with violating PACA by altering fifty-three
USDA inspection certificates and submitting false accounts
to seven suppliers. The Complaint requested that
MacClaren’s license be revoked due to its “willful, flagrant
and repeated violations” of PACA. On September 20 and 21,
2000, Administrative Law Judge (ALJ) James W. Hunt
conducted a hearing in Detroit, Michigan. In his decision and
order finding that MacClaren violated PACA as alleged in the
complaint, the ALJ noted that MacClaren “did not deny that
53 USDA inspection certificates had been altered.” He held
that because “these unlawful acts were committed by
[MacClaren’s] salesmen in the course of their employment,
they are deemed to be the acts of [MacClaren].” In deciding
the appropriate sanction for the violations, the ALJ found that
it had not been shown that MacClaren “was irresponsible or
unscrupulous and no evidence was provided to show that
license revocation or suspension would have a greater
beneficial effect on the industry than a monetary fine.”
According to the ALJ, MacClaren “acted responsibly when it
became aware of the fraudulent practices of its salesmen” and
“took prompt measures to provide restitution to the shippers.”
Moreover, the ALJ recognized that neither Olds or Gottlob
was criminally prosecuted for altering federal inspections
under 7 U.S.C. § 499n(b).2 Therefore, the ALJ imposed a
civil penalty of $50,000.
6 H.C. MacClaren, Inc. v.
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No. 02-3006
3The Secretary of Agriculture has delegated authority to the Judicial
Officer to act as final deciding officer in the U SD A’s adjudicatory
proceedings subject to 5 U.S.C. §§ 556 & 557. 7 C.F.R. § 2.35.
The agency appealed the ALJ’s decision to the Judicial
Officer, acting for the Secretary of Agriculture, on May 23,
2001.3 Among other things, the agency argued that the ALJ
erred in failing to find MacClaren’s violations willful and
therefore further erred by imposing a sanction of a civil
monetary penalty rather than license revocation. On
November 8, 2001, without conducting an additional hearing,
Judicial Officer William G. Jenson issued a decision and
order in which he agreed with the majority of the ALJ’s
findings. The decision, however, differed from the opinion of
the ALJ in two significant areas. First, in the findings of fact,
the Judicial Officer concluded that Gregory MacClaren and
Darrell Moccia, MacClaren’s owners, “did not know, but
should have known, during the period of June 1994 through
November 1996, that the United States Department of
Agriculture inspection certificates . . . were altered and that
the false accounts of sales . . . were made.” In addition, the
Judicial Officer disagreed with the sanction of a civil
monetary penalty and instead imposed the sanction of license
revocation. MacClaren filed its petition for review in this
court on January 2, 2002, which was within sixty days of
issuance of the final agency order as required under 28 U.S.C.
§ 2344.
II.
In 1930, Congress enacted PACA “for the purpose of
regulating the interstate business of shipping and handling
perishable agricultural commodities such as fresh fruit and
vegetables.” Allred’s Produce v. United States Dep’t of
Agric., 178 F.3d 743, 745 (5th Cir. 1999) (quoting George
Steinberg and Son, Inc. v. Butz, 491 F.2d 988 (2d Cir. 1974)).
PACA was “designed to ensure that commerce in agricultural

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commodities is conducted in an atmosphere of financial
responsibility.” Kanowitz Fruit and Produce Co, Inc., v.
United States Dep’t of Agric., No. 97-4224, 1998 WL
863340, at *1 (2d Cir. Oct. 29, 1998). It provides “a measure
of control over a branch of industry which is almost
exclusively in interstate commerce, is highly competitive, and
presents many opportunities for sharp practice and
irresponsible business conduct.” Allred’s Produce, 178 F.3d
at 745 (quoting Zwick v. Freeman, 373 F.2d 110, 116 (2d Cir.
1967)). To achieve this control, PACA establishes a strict
licensing system and subjects all dealers of perishable
agricultural commodities to severe sanctions for violations of
PACA’s requirements. Id.; 7 U.S.C. §§ 499c(a) & 499h. The
USDA is designated with authority to administer and enforce
PACA.
Under PACA, dealers are subject to a number of statutory
requirements including making full payment promptly for all
purchases of perishable agricultural commodities. 7 U.S.C.
§ 499b(4). In addition, it is unlawful for any dealer “to make,
for a fraudulent purpose, any false or misleading statement in
connection with any transaction involving any perishable
agricultural commodity” and “to fail or refuse [to] truly and
correctly . . . account for such transactions.” Id. Violations
of PACA’s requirements may result in sanctions. The
Secretary may publish the facts and circumstances of
violations and suspend the license of the violator for up to
ninety days, or, if a violation is flagrant or repeated, the
Secretary may revoke the violator’s license. 7 U.S.C.
§ 499h(a). In 1995, Congress amended PACA to provide for
the alternative sanction of a civil monetary penalty not to
exceed $2,000 per violation or $2,000 each day a violation
continues. 7 U.S.C. § 499h(e).
The USDA set forth the standard governing the decision to
impose a particular sanction in In re S.S. Farms Linn County,
Inc.:
8 H.C. MacClaren, Inc. v.
United States Dep’t of Agric.
No. 02-3006
[R]eliance will no longer be placed on the “severe”
sanction policy set forth in many prior decisions. Rather,
the sanction in each case will be determined by
examining the nature of the violations in relation to the
remedial purposes of the regulatory statute involved,
along with all relevant circumstances, always giving
appropriate weight to the recommendations of the
administrative officials charged with the responsibility
for achieving the congressional purpose.
50 Agric. Dec. 476, 497 (1991) (citations omitted), aff’d,
1993 WL 128889 (9th Cir. 1993). Accordingly, the Secretary
must consider all relevant circumstances, including both
mitigating and aggravating circumstances, when selecting the
appropriate sanction. See Tambone v. United States Dep’t of
Agric., 50 F.3d 52, 55 (D.C. Cir. 1995).
MacClaren first contends that the Secretary, acting through
the Judicial Officer, failed to apply the proper USDA standard
for determining sanctions in deciding to revoke MacClaren’s
license. Whether the Secretary applied the correct standard is
a question of law subject to de novo review. Potato Sales
Co., Inc. v. Dep’t of Agric., 92 F.3d 800, 803 (9th Cir. 1996)
(“[a]n agency’s conclusions of law are subject to de novo
review”). Our review of the Secretary’s decision indicates
that the Secretary applied the correct legal standard for
determining the appropriate sanction as set forth in S.S.
Farms Linn County, Inc.
MacClaren next claims that the Secretary applied the legal
standard incorrectly and therefore imposed an improper
sanction because the Secretary did not examine the nature of
the violations in relation to the remedial purpose of PACA
and did not consider all relevant circumstances. Our review
of an administrative agency decision is narrow, and we will
uphold the decision unless it is “arbitrary, capricious, an
abuse of discretion, or otherwise not in accordance with the
law.” Allred’s Produce, 178 F.3d at 746 (quoting 5 U.S.C.

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§ 706(2)(A)). Specifically, we review whether the Secretary
misapplied the sanction standard for an abuse of discretion,
and we may not overturn the Secretary’s choice of sanction
unless it is unwarranted in law or without justification in fact.
See Havana Potatoes of New York Corp. v. United States
Dep’t of Agric., 136 F.3d 89, 91, 93 (2d Cir. 1997)
(considering under an abuse of discretion standard whether
the Secretary’s choice of sanction was based on an erroneous
policy regarding sanctions and whether the Judicial Officer
misapplied the USDA sanction standard, and noting that the
Secretary’s choice of sanction is not to be overturned unless
it is unwarranted in law or without justification in fact );
Norinsberg Corp. v. United States Dep’t of Agric., 47 F.3d
1224, 1228 (D.C. Cir. 1995) (analyzing appellant’s argument
that the Secretary failed to consider all relevant circumstances
for an abuse of discretion and recognizing that the Secretary’s
choice of sanction cannot be overturned unless it is
unwarranted in law or unjustified in fact).
According to MacClaren, the remedial purpose of PACA is
to “assure that only financially responsible brokers are in
business so that growers are paid for the produce they
supply.” MacClaren admits in its reply brief, however, that
“deterring irresponsible and unscrupulous conduct” is also
part of PACA’s “remedial purpose.” MacClaren points out
that its actions of investigating the wrongdoing and making
restitution indicate financial responsibility. MacClaren
argues that the Secretary’s decision to impose the sanction of
revocation, as opposed to a civil monetary penalty, did not
properly consider the benefits of a civil monetary penalty,
including promoting the remedial purposes of PACA and
encouraging dealers suspected of violations to cooperate with
investigators and make restitution. Moreover, MacClaren
contends that the Secretary ignored relevant circumstances
such as “who will be most affected by the sanction, the
deception of the salesmen’s acts and the lack of any prior
violations by the company.”
10 H.C. MacClaren, Inc. v.
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No. 02-3006
Before determining the appropriate sanction against
MacClaren, the Secretary fully set forth the sanction policy as
described in S.S. Farms Linn County, Inc. While the
Secretary did not explicitly describe the remedial purposes of
PACA, the Secretary noted that “[t]he purpose of a sanction
in a PACA administrative disciplinary proceeding is to deter
the violator and other potential violators from future
violations of the PACA.” Considering this purpose, the
Secretary concluded that a civil monetary penalty would not
sufficiently deter MacClaren and other potential violators
from future violations of PACA and that license revocation
was necessary to deter such violations.
The sanction policy states that it is “the nature of the
violations” that is to be examined “in relation to the remedial
purposes” of PACA, not the actions taken after the violations,
which could be, and were, considered as relevant
circumstances. The nature of the violations at issue, altering
inspection certificates and falsifying accounts resulting in
losses to shippers in excess of $136,000, indicates that
MacClaren was not a financially responsible dealer. The
Secretary set forth the specific violations of PACA and noted
that the number of violations and the seriousness of the
violations were factors in determining that revocation of
MacClaren’s license was warranted. Therefore, the Secretary
properly considered the nature of the violations in relation to
the remedial purposes of the PACA. Cf. ABL Produce, Inc.
v. United States Dep’t of Agric., 25 F.3d 641, 646 (8th Cir.
1994) (noting that “consideration of the ‘relevant
circumstances’ should include consideration of the statute’s
purpose” and finding that license revocation was not
appropriate after examining all relevant circumstances).
MacClaren also claims that the Secretary failed to consider
all relevant circumstances before deciding to revoke its
license. MacClaren complains that the sanction of license
revocation falls exclusively on Gregory MacClaren and
Darrell Moccia, while Olds and Gottlob are not subject to any

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No. 02-3006 H.C. MacClaren, Inc. v.
United States Dep’t of Agric.
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penalty. The sanction, however, falls entirely on MacClaren
as a company. Furthermore, because Olds, Gottlob and
Johnston were acting within the scope of their employment
when they knowingly and willfully violated PACA, their
knowing and willful violations are deemed to be knowing and
willful violations by MacClaren. Under PACA, “the act,
omission, or failure of any agent, officer, or other person
acting for or employed by any commission merchant, dealer,
or broker, within the scope of his employment or office, shall
in every case be deemed the act, omission, or failure of such
commission merchant, dealer, or broker as that of such agent,
officer, or other person.” 7 U.S.C. § 499p. According to the
Sixth Circuit, acts are “willful” when “knowingly taken by
one subject to the statutory provisions in disregard of the
action’s legality.” Hodgins v. United States Dep’t of Agric.,
No. 97-3899, 2000 WL 1785733 (6th Cir. Nov. 20, 2000)
(quotation omitted). “Actions taken in reckless disregard of
statutory provisions may also be considered ‘willful.’” Id.
(quotation and citations omitted). The MacClaren employees
admitted to altering USDA inspection certificates and issuing
false accounts of sale in knowing disregard of their actions’
legality. Accordingly, their willful violations are deemed
willful violations by MacClaren.
MacClaren asserts that all of the aggravating factors listed
by the Secretary were caused by the salesmen with the
exception of MacClaren’s negligent supervision and its
retention of the salespersons who engaged in the unlawful
conduct, and, according to MacClaren, consideration of these
two factors is inappropriate. MacClaren fails to cite any
authority supporting its argument that these factors are not
relevant or otherwise should not be considered. According to
MacClaren, the Secretary improperly established a new duty
under PACA that supervisors review some undesignated
portion of a salesperson’s files and that failure to do so
constitutes negligent supervision. The Secretary, however,
properly considered the management and supervision of
employees in a highly regulated industry as a relevant factor
12 H.C. MacClaren, Inc. v.
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No. 02-3006
to be weighed in a sanction determination. See generally,
Norinsberg, 47 F.3d at 1227 (considering relevant
circumstances such as the company’s financial difficulties,
accords reached with suppliers, and the potential harm to the
company’s creditors from suspending its license). Similarly,
while retention of employees who commit violations of
PACA is not directly prohibited by PACA, the retention of
such employees may be considered relevant in determining
whether license suspension or revocation is required to deter
future violations. Moreover, as noted above, MacClaren is
deemed to have committed the knowing and willful violations
committed by its employees, and, therefore, the Secretary
properly considered the aggravating factors inherent in the
employees’ violations. Accordingly, the Secretary considered
all relevant circumstances as required in S.S. Farms Linn
County, Inc. in deciding to impose the sanction of license
revocation.
MacClaren next claims that the Secretary erred in imposing
a sanction of license revocation as a result of MacClaren’s
violations of PACA. As we previously noted, the Secretary’s
decision regarding an appropriate sanction may only be
overturned if it is found to be unwarranted in law or without
justification in fact. Butz v. Glover Livestock Comm’n Co.,
Inc., 411 U.S. 182, 185-86 (1973); Harry Klein Produce
Corp. v. United States Dep’t of Agric., 831 F.2d 403, 406 (2d
Cir. 1987). An appellate court may not reweigh the evidence
or substitute its judgment for that of the Secretary. Havana
Potatoes, 136 F.3d at 91. “The fashioning of an appropriate
and reasonable remedy is for the Secretary, not the court.”
Glover Livestock Comm’n Co., 411 U.S. at 188-89. “The
court may decide only whether under the pertinent statute and
relevant facts, the Secretary made ‘an allowable judgment in
(his) choice of the remedy.’” Id. at 189 (quoting Jacob Siegel
Co. v. Federal Trade Comm’n, 327 U.S. 608, 612 (1946)).
MacClaren argues that the sanction imposed is without
justification in fact. Specifically, MacClaren claims that there

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is no evidence to support the Secretary’s determination that
license revocation is necessary to deter future violations.
MacClaren asserts that it has acted to rectify the wrongdoing
and prevent future violations and argues that these remedial
actions should be taken into consideration. In addition,
MacClaren contends that the Secretary’s finding that Gregory
MacClaren and Darrell Moccia would have known about the
altered inspections and false accountings if they had properly
supervised their salesmen is without justification in fact.
License revocation under PACA is authorized where the
violation is “flagrant or repeated.” 7 U.S.C. § 499h(a);
Norinsberg Corp., 47 F.3d at 1225. In determining whether
violations are “flagrant” under PACA, the court considers
“the number of violations, the amount of money involved,
and the time period during which the violations occurred.”
Allred's Produce, 178 F.3d at 748. “Repeated” violations
under PACA are violations that are not committed
simultaneously. Id. The Secretary found that MacClaren’s
violations of PACA were both flagrant and repeated. The
Secretary’s findings are supported by the record. Three of
MacClaren’s four salesmen admitted to altering fifty-three
inspection certificates over a twenty-nine month period
resulting in underpayments totaling $130,903 to twenty-two
suppliers. These violations meet the definitions of flagrant
and repeated. Therefore, the revocation of MacClaren’s
license was well within the Secretary’s authority and
discretion. See Allred’s Produce, 178 F.3d at 747 (agreeing
with the Secretary that Allred’s violations of PACA were
flagrant and repeated and therefore holding that the Secretary
did not abuse his discretion in revoking a dealer’s license).
Moreover, the Secretary’s legal conclusions that license
revocation was necessary to deter future violations and that
Gregory MacClaren and Darrell Moccia were negligent in
failing to review transaction files prepared by their salesmen
14 H.C. MacClaren, Inc. v.
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No. 02-3006
4MacClaren argues that there is little in this case to suggest that
license revocation, rather than a civil mo netary p enalty, is nec essary to
deter it or others from future violations of PACA. MacC laren points out
that a civil monetary penalty would seem esp ecially ap propriate in this
case where the imposition of such a penalty, as opposed to revocation,
would encourage other d ealers to cooperate with investigators and attempt
to make restitution. We recognize the merit in MacClaren’s argument.
W e do note, however, that a while imposing a civil monetary penalty as
opposed to license revo cation may encourage coop eration, it would not
be as effective a deterrent because violators might believe that they could
com mit violations and, if caught, simply cooperate and pay restitution and
monetary penalties. In the instant case, we are limited to determin ing
only whether the Secretary made an allowable judgment in the choice of
remedy. Glover Livestock Comm’n Co., 411 U.S. at 189. Both revocation
and a civil penalty were pro per p ossible remedies in this case. We are not
at liberty to reexamine the aggravating and mitigating evidence to
determine whether we would have arrived at some lesser sanction, such
as a civil penalty. See Havana Po tatoes, 136 F.3d at 91.
are sufficiently supported by facts set forth by the Secretary.4
With regard to deterrence, the Secretary found as follows:
[I]n light of the number of [MacClaren’s] willful
violations, the seriousness of [MacClaren’s] willful
violations, the 29-month period during which the
violations occurred, the number of [MacClaren’s]
employees who altered United States Department of
Agriculture inspection certificates and made false
accounts of sales, the amount of money which
[MacClaren] underpaid its produce suppliers and/or
brokers, [MacClaren’s] retention of the salespersons who
engaged in the unlawful conduct, and [MacClaren’s]
principal’s failure to review transaction files prepared by
[its] salespersons, I conclude a civil penalty would not be
sufficient to deter [MacClaren] and other potential
violators from future violations of the PACA.
In determining whether Gregory MacClaren and Darrell
Moccia were negligent in failing to review their salesmen’s
transaction files, the Secretary considered the requirements of

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PACA, testimony from an experienced manager in the
produce sales industry, and testimony from the USDA
sanction witness. Based on the prohibitions set forth in
PACA and the testimony that appropriate supervision by a
manager includes reviewing a salesperson’s transaction files,
at least on a random sampling basis, the Secretary concluded
that “failure to review a least a portion of the transaction files
prepared by . . . salespersons constitutes gross negligence.”
Because these legal conclusions are sufficiently supported by
evidence in the record, the Secretary’s decision to revoke
MacClaren’s PACA license was justified in fact and was not
an abuse of discretion.
III.
For all the reasons set forth above, we affirm the decision
of the Secretary.

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