Justia.com Opinion Summary:
A client complained to the Grain Inspection, Packers and Stockyard Administration about the broker purchasing his own stock for customers. Following a remand, the USDA imposed a 16-month suspension on his registration under the Packers and Stockyards Act, 7 U.S.C. 181-229. The Eighth Circuit affirmed. The judicial officer adequately considered the nature of the violations in relation to the remedial purposes of the PSA. The suspension was not too harsh, given the circumstances of the violation.Receive FREE Daily Opinion Summaries by Email
Petition for Review - Packers and Stockyards Act. For the court's prior opinion in the matter, see Syverson v. U.S. Dept. Of Agriculture, 601 F.3d 793 (8th Cir. 2010). While the 16-month suspension imposed on remand was substantial, Syverson could not show that it was unwarranted under the law or unjustified by the facts, and the suspension is affirmed.
United States Court of Appeals
FOR THE EIGHTH CIRCUIT
Todd Syverson, doing business as
Syverson Livestock Brokers,
United States Department of
* Petition for Review of an
* Order of the United States
* Department of Agriculture.
Submitted: November 16, 2011
Filed: January 27, 2012
Before WOLLMAN, MURPHY, and BENTON, Circuit Judges.
WOLLMAN, Circuit Judge.
Todd Syverson appeals from the sixteen-month suspension of his registration
under the Packers and Stockyards Act (PSA or Act), 7 U.S.C. Â§Â§ 181-229, a sanction
imposed after remand by the judicial officer of the United States Department of
Agriculture. We affirm.
In 2002, Syverson purchased cattle for Lance Quam. Syverson purchased
cattle at a slaughter auction, had them inspected by a veterinarian, consigned them for
sale at a dairy auction, and then repurchased them from his own consignment. He
delivered some of the cows to Quam, accompanied by an invoice that showed the
dairy-auction price, a commission, a veterinary fee, and the cost of trucking.
Syverson did not disclose that he had repurchased the cows from his own
consignment or that the cows initially had been purchased at the slaughter auction,
at a lower price.
After Quam discovered Syversonâ€™s practice, he complained to the Grain
Inspection, Packers and Stockyard Administration (GIPSA). GIPSA commenced an
investigation and requested that Syverson produce his business records. Syverson
claimed that the records were lost or misfiled, but eventually turned over some
records. Those records did not include the initial price or the source of the cows
purchased for Quam. In 2004, GIPSA filed a formal complaint against Syverson,
alleging that his self-dealing was an unfair or deceptive practice, in violation of 7
U.S.C. Â§ 213(a), and that his failure to keep proper records violated 7 U.S.C. Â§ 221.
An administrative law judge (ALJ) determined that Syverson, acting as a
dealer, had engaged in unfair and deceptive trade practices and had intentionally
withheld business records, in violation of the PSA. The ALJ assessed a civil penalty
and ordered Syverson to cease and desist from similar violations of the Act. GIPSA
appealed the decision to the judicial officer. The judicial officer concluded that
Syverson acted as a market agency, engaged in unfair and deceptive practices, and
failed to keep adequate records of his business. Along with a cease and desist order,
the judicial officer suspended Syversonâ€™s registration under the PSA for five years.
Syverson then appealed to our court.
In our first decision, Syverson v. U.S. Department of Agriculture, 601 F.3d 793
(8th Cir. 2010) (Syverson I), we upheld the determination that Syverson, as a market
agency, had violated the Act. We reversed the judicial officerâ€™s imposition of a fiveyear suspension, however, concluding that it was â€œunwarranted in law and without
justification in fact.â€ Id. at 805. On remand, GIPSA recommended a two-year
suspension, while Syverson requested a suspension of â€œless than 30 days, if any.â€ In
re Todd Syverson, P&S Docket No. D-05-0005, 3 (Nov. 16, 2010) (Decision and
Order on Remand) (quoting the brief Syverson submitted after remand). Following
briefing and review of the record, the judicial officer imposed a sixteen-month
suspension. The final order allows Syverson to apply for a modification to be a
salaried employee of another registrant or packer, following the expiration of eight
months of the suspension term. Id. at 14-15. The suspension has been stayed
pending judicial review.
The Secretary may suspend â€œfor a reasonable specified periodâ€ any registrant
who has violated any provision of the Act. 7 U.S.C. Â§ 204. We review the
Secretaryâ€™s orders â€œaccording to the fundamental principle that where Congress has
entrusted an administrative agency with the responsibility of selecting the means of
achieving the statutory policy the relation of remedy to policy is peculiarly a matter
for administrative competence.â€ Butz v. Glover Livestock Commâ€™n Co., 411 U.S.
182, 185 (1973) (quoting Am. Power Co. v. SEC, 329 U.S. 90, 112 (1946)) (internal
quotations and alterations omitted). â€œThe court may decide only whether under the
pertinent statute and relevant facts, the Secretary made â€˜an allowable judgment in
[his] choice of the remedy.â€™â€ Id. at 189 (quoting Jacob Siegel Co. v. FTC, 327 U.S.
608, 612 (1946)) (alterations in original). Thus, we cannot overturn the Secretaryâ€™s
choice of sanction unless it is â€œunwarranted in law . . . or without justification in
fact.â€ Id. at 185-86 (quoting Am. Power Co., 329 U.S. at 112-13).
In Syverson I, we held that the five-year suspension was â€œnot a â€˜reasonable
specified period,â€™ given the judicial officerâ€™s deviation from the requirements of his
own sanction policy and the facts of this case.â€ 601 F.3d at 805. The sanction policy,
set forth in In re: S.S. Farms Linn County, Inc., required the judicial officer â€œ(1) to
examine the nature of the violations in relation to the remedial purposes of the PSA,
(2) to consider all relevant circumstances, and (3) to give appropriate weight to the
recommendations of the administrators of the PSA.â€ Syverson I, 601 F.3d at 804
(citing S.S. Farms Linn Cnty., 50 Agric. Dec. 476, 497 (1991)). The judicial officer
did not address the first factor, leaving us â€œonly to speculate how Syversonâ€™s
violations relate[d] to the remedial purposes of the PSA.â€ Id. Moreover, the judicial
officer failed to consider all relevant circumstances, particularly the nature of
Syversonâ€™s violation and the effect the suspension would have on him. Id. at 804-05.
On remand, the judicial officer applied the sanction policy set forth above.1
Syverson contends, however, that the judicial officer again failed to consider the first
factor. Although his discussion of the issue is not lengthy, the judicial officer
considered the nature of Syversonâ€™s violations in relation to the remedial purposes of
the Act. Syverson owed a fiduciary duty to Quam, but he repurchased cattle from his
own consignment for sale to Quam, without disclosing his conflict of interest. The
judicial officer concluded that this unfair and deceptive practice related to the purpose
of assuring fair trade practices in livestock marketing. Decision and Order on
Remand at 4. Moreover, he found that Syverson â€œthwarted the Secretary of
Agricultureâ€™s ability to enforce the Packers and Stockyards Act when he failed to
produce records, which he was required to keep, for examination by United States
Department of Agriculture investigators.â€ Id. at 4-5. The judicial officer ultimately
concluded that a significant period of suspension was necessary.
We find Syversonâ€™s contention that the judicial officer relied on the â€œsevereâ€
sanction policy, which was abandoned in 1991, to be without merit. See S.S. Farms
Linn Cnty., 50 Agric. Dec. at 497 (â€œ[R]eliance will no longer be placed on the
â€˜severeâ€™ sanction policy set forth in many prior decisions . . . .â€).
Syverson further contends that the Act seeks to prevent unfair price increases
to consumers. So, although he concedes that he violated the Act when he failed to
disclose his self-interested transactions to Quam, he maintains that he charged Quam
a fair price and that his violations would have been cured if he had disclosed his
conflict of interest to Quam. Regardless of whether the price was fair, his violation
â€œinvolved price manipulation resulting in ill-gotten gain for him and economic harm
to his customer.â€ Syverson I, 601 F.3d at 804. Accordingly, it inhibited fair trade
and can fairly be described as a practice the Act was designed to remedy. See United
States v. Donahue Bros., 59 F.2d 1019, 1022 (8th Cir. 1932) (â€œIn the case of
stockyards the evils to be dealt with are a multiplicity of more or less minor
matters . . . and minor injustices against shippers and purchasers, which, if to be
remedied effectively must be dealt with promptly.â€) (quoting comments by the
Chairman of the House Committee on Agriculture, speaking for his committee with
reference to the Packers and Stockyards Act). We thus conclude that the judicial
officer adequately considered the nature of the violations in relation to the remedial
purposes of the PSA.
Syverson next contends that the suspension is too harsh, given the
circumstances of the violation. In Syverson I, we concluded that the judicial officer
failed to consider all relevant circumstances, including that Syversonâ€™s violations
were limited to one customer and involved a relatively small number of livestock and
that a five-year suspension would likely bankrupt Syverson. 601 F.3d at 804-05. We
emphasized that â€œthe nature of the conduct in question is crucially important, as well
as the effect of the proposed sanction on the registrant.â€ Id. at 804.
Although a sixteen-month suspension is a significant sanction, the judicial
officer considered the circumstances we instructed him to consider. Syverson urges
us to compare his suspension to the cases in which we reversed much shorter
suspensions. See Ferguson v. U.S. Depâ€™t of Agric., 911 F.2d 1273 (8th Cir. 1990)
(six months); W. States Cattle Co. v. U.S. Depâ€™t of Agric., 880 F.2d 88 (8th Cir.
1989) (six months); Farrow v. U.S. Depâ€™t of Agric., 760 F.2d 211 (1985) (forty-five
days). But the judicial officer adequately distinguished those cases, see In re Todd
Syverson, P&S Docket No. D-05-0005, 7-8 (Dec. 22, 2010) (Order Denying
Reconsideration of Decision and Order on Remand), and the Supreme Court has held
that â€œmere unevenness in the application of the sanction does not render its
application in a particular case â€˜unwarranted in law.â€™â€ Butz, 411 U.S. at 189.
If not unwarranted in law, Syverson must show that the sanction is unjustified
in fact. He cannot do so. After weighing the nature of the violation and the effect of
the suspension on Syverson, the judicial officer imposed a sanction that he believed
would ensure Syversonâ€™s compliance with the Act without necessarily forcing him
from the industry. In determining the sanction, the judicial officer considered the
facts that the deception involved only one purchaser and twenty-four cows. He
concluded that those mitigating â€œfactors form[ed] part of the basis for my reduction
of the five-year period of suspension which I imposed on Mr. Syverson.â€ Decision
and Order on Remand at 5-6. The judicial officer also considered Syversonâ€™s
argument that a suspension would be devastating for his family against GIPSAâ€™s
argument that a two-year suspension likely would not bankrupt Syverson or visit
extreme hardship on his family. Id. at 6-7 (citing GIPSAâ€™s evidentiary showing in
support of its argument). Ultimately, the judicial officer concluded that Syversonâ€™s
â€œviolations are serious and, in my view, a significant period of suspension as a
registrant . . . is necessary to deter Mr. Syverson and others from violating the [Act],
even if the suspension poses some risk that Mr. Syverson may declare bankruptcy and
poses a threat to Mr. Syversonâ€™s livelihood.â€ Id. at 7. Syverson thus has failed to
show that the suspension â€œwas so without justification in fact as to constitute an abuse
of the Secretaryâ€™s discretion.â€ Butz, 411 U.S. at 188 (quoting Am. Power Co., 329
U.S. at 115) (internal quotations and alteration omitted).
Finally, Syverson argues that the judicial officer abused his discretion by
considering the prior cease and desist order involving Syverson and by failing to
consider Syversonâ€™s â€œlack of notice that his actions were in breach of a fiduciary
duty.â€ Appellantâ€™s Br. 31. In Syverson I, we said, â€œThese serious offenses are
deserving of a significant sanction, especially in light of the prior cease and desist
order for price manipulation that had been imposed upon Syverson.â€ 601 F.3d at 805.
We also concluded that Syverson was on notice that his actions were unlawful. Id.
at 803 n.6. Our prior panel decision thus has foreclosed these arguments.
The sanction is affirmed.