Ratto Bros., Inc. v. Lam

Background

Ratto Bros., Inc. brought claims under the Perishable Agricultural Commodities Act (PACA), 7 U.S.C. § 499e. Ratto Bros. alleged that it sold and delivered perishable agricultural commodities to Nam D Lam, that Lam accepted the produce, that the transactions involved interstate commerce, that Lam did not pay in full, and that Ratto Bros.’ invoices preserved its rights under PACA’s statutory trust provisions.

Ratto Bros. moved for a default judgment. Magistrate Judge Donna M. Ryu recommended denying the motion because Ratto Bros.’ amended complaint did not address whether Lam bought the produce solely for retail sale or, if so, whether Lam’s annual purchases exceeded $230,000—the statutory threshold for treating a retailer as a PACA “dealer.” Ratto Bros. sought de novo review of that portion of the recommendation.

Court’s analysis

The district court disagreed with the magistrate judge’s treatment of the retailer exception. The court noted that Ratto Bros. had not alleged that Lam was a retailer or might fall within the exception, and that Ratto Bros. had amended its complaint to allege that Lam fit PACA’s definition of a dealer engaged in wholesale or jobbing quantities. The court stated that it was not aware of a legal requirement that a party seeking default judgment disprove affirmative defenses that the opposing party might have raised but did not raise.

The court found the rest of the report and recommendation correct and adopted it. It also found that Ratto Bros.’ invoices provided for penalties, fines, attorney’s fees, and costs if Lam failed to pay. The court stated that Ratto Bros. was entitled to the following relief from Lam:

- $7,879.00 in principal; - $1,005.23 in prejudgment finance charges through March 1, 2021; - $2,697.50 in attorney’s fees; - $503.45 in costs; and - Post-judgment finance charges on the principal only, at 12% per year—an average of $9.45 per day—from March 1, 2021, until fully paid.

The court separately denied Ratto Bros.’ motion to augment the record with the declaration of Frank Ratto, stating that neither the report and recommendation nor the court relied on that declaration.

Disposition

The court adopted the report and recommendation in part and modified it in part. It modified the recommendation concerning the retailer exception, awarded Ratto Bros. the listed monetary relief and continuing finance charges, denied the motion to augment the record, and vacated the hearing. The opinion describes the matter as a motion for default judgment but does not separately state in those exact words that the motion was granted.

Classification note

This is classified as a procedural order because the court’s action concerned default judgment, which is treated as procedural under the stated classification rules, even though the court discussed PACA’s requirements and awarded relief.