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Bright Harvest Sweet Potato Co. v. Idaho-Frank Associates, Inc.

United States District Court, W.D. Arkansas, Fort Smith Division

July 26, 2018

BRIGHT HARVEST SWEET POTATO CO. PLAINTIFF
v.
IDAHO-FRANK ASSOCIATES, INC. AND MARK LYONS DEFENDANTS

          OPINION AND ORDER

          P.K. HOLMES, III CHIEF U.S. DISTRICT JUDGE

         Before the Court are Defendants' motion to dismiss (Doc. 19), brief in support (Doc. 20), and Plaintiffs response in opposition (Doc. 23). For the following reasons, the Court finds that Defendant's motion to dismiss (Doc. 19) should be denied.

         I. Background

         Plaintiff filed a Complaint against Defendants under the Perishable Agricultural Commodities Act of 1930 ("PACA"), 7 U.S.C. § 499a-499s. Plaintiff alleges that it sold and delivered wholesale produce to Defendant Idaho-Frank Associates, Inc. ("IFA") and that Defendant IFA failed to pay for the produce. Plaintiff seeks injunctive relief and damages. Defendants move to dismiss Plaintiffs complaint pursuant to Federal Rule of Civil Procedure 12(b)(6).

         II. Legal Standard

         In ruling on a motion to dismiss, the Court must "accept as true all facts pleaded by the non-moving party and grant all reasonable inferences from the pleadings in favor of the non-moving party." Gallagher v. City of Clayton, 699 F.3d 1013, 1016 (8th Cir. 2012). "[A] complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citations omitted). However, pleadings that contain mere "labels and conclusions" or "a formulaic recitation of the elements of the cause of action will not do." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2009).

         "Twombly and Iqbal did not abrogate the notice pleading standard of [Federal] Rule [of Procedure] 8(a)(2). Rather, those decisions confirmed that Rule 8(a)(2) is satisfied 'when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for a misconduct alleged.'" Hamilton v. Palm, 621 F.3d 816, 817 (8th Cir. 2010) (quoting Iqbal, 556 U.S. at 678). Where the facts alleged, taken as true, "raise a reasonable expectation that discovery will reveal evidence" in support of a plaintiff s claim, the Court should not grant a motion to dismiss. Twombly, 550 U.S. at 556.

         III. Analysis

         Defendant contends that (1) Plaintiff is not entitled to the protections of PACA, (2) Plaintiff is not entitled to injunctive relief, (3) individual defendant Mark Lyons should be dismissed, and (4) Plaintiff has not stated a basis for its fourth cause of action. The Court will address each of these arguments in turn.

         A. PACA

         Defendants contends that "[a]s a threshold matter, all of the PACA claims fail because Plaintiff has failed to provide a sufficient factual basis to establish that it is entitled to the protections of PACA."

         Under PACA, "[p]erishable agricultural commodities received by a commission merchant, dealer, or broker . . . shall be held ... in trust for the benefit of all unpaid suppliers or sellers of such commodities . . . until full payment of the sums owing in connection with such transactions has been received." 7 U.S.C. § 499(e)(c)(2).

         First, Defendant argues that "[t]he Complaint lacks sufficient factual allegations with respect to the perishable agricultural commodity alleged to be at issue" because "[t]he Complaint fails to identify the fresh fruits or vegetables that Plaintiff allegedly delivered to Defendants." However, the invoices attached to the complaint identify the products sold by Plaintiff to Defendant IFA as "Frozen Sweet Potato Fries." (Doc. 9-1). Accordingly, Plaintiff has pleaded factual content that allows the Court to draw the reasonable inference that the product at issue is a perishable agricultural commodity. See Fleming Companies, Inc. v. U.S. Dept. of Agriculture, 322 F.Supp.2d 744, 763 (E.D. Tex. 2004) (finding that cases concluding that "battered and coated frozen potato products are not 'fresh vegetables' under PACA . . . arose before the promulgation of the USDA's new rule, which includes battering and coating as operations that do not change a commodity into a food of a different kind or character.").

         Second, Defendant argues that "Plaintiff fails to state any factual basis for its conclusion that Defendant IFA is a 'dealer.'" However, the amended complaint states that "[b]etween on or about September 8, 2017 and September 25, 2017 plaintiff, Bright Harvest, sold and delivered to the defendant, IFA, wholesale quantities of produce in the aggregate principal amount of $349, 675.00." (Doc. 9, ¶ 12). Accordingly, Plaintiff has pleaded factual content that allows the Court to draw the reasonable inference that Defendant IFA is a dealer under PACA. See 7 U.S.C. ยง499(a)(b)(6) ("The term 'dealer' means any person engaged in the business of buying or selling in wholesale or jobbing quantities, as defined by the Secretary, any perishable agricultural commodity in interstate or foreign commerce, except that ... no person buying any such ...


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