The Intersection of PACA and Transportation Claims

With the PACA Good Arrival Guide-lines as a measuring stick, a timely USDA inspection certificate allows the condition of fresh produce to be quantified and assessed in an objective and standardized manner that effectively settles any question with respect to the condition of the produce upon arrival at contract destination. This notwithstanding, a receiver with only photographs of produce in support of its carrier claim can be expected to argue that photos, combined with a detailed account of sales, should be good enough to support alleged damages when the precise percentage of defects is less important than in a vendor-to-vendor scenario (where “good arrival” can easily hinge on a 2% difference).

Photographs, however, typically only represent the condition of a very small percentage of the lot, and photos of defects affecting individual pieces of fruit are not usually very helpful in assessing the commercial value of a truckload of produce.

Consequently, carriers presented with only photos as proof of thousands of dollars’ worth of alleged damages are in a good position to argue that PACA precedent providing that photographs alone are not sufficient to quantify defects is well-founded, and should apply in the context of carrier claims as well. At a minimum, when the receiver fails to obtain a USDA inspection certificate, any benefit of the doubt with respect to the condition of the produce is likely to be resolved in the carrier’s favor.

SALVAGE RETURNS
When a shipment of produce is rejected to a carrier, like it or not, the carrier (or truck broker) may be put in a position where it must consign a truckload of produce, usually through a wholesaler, to mitigate losses. And if a USDA inspection is taken showing the product is affected with excessive condition defects, the carrier might assume it is stuck with whatever salvage returns the wholesaler offers after the product has been sold.

Yet PACA precedent is helpful in this regard, providing that consignees (the wholesaler in this scenario) must provide consignors (the carrier or truck broker) with a detailed accounting of how the product was handled. This accounting must show the selling price for each carton, and must itemize all deductions taken from the salvage proceeds.

If the salvaging firm refuses to provide a detailed accounting or if the accounting does not reflect a “prompt and proper” or “reasonable” effort to sell the product, then per PACA precedent, the wholesaler’s proffered returns may be discarded and a reasonable return imputed. For example, if salvage proceeds from a shipment with 20% condition defects are not supported with a detailed accounting, and amount to only 15% of the market value of the commodity in question, then the proffered return would likely be deemed unreasonable, and a new figure would be imputed.