Jan 23, 2014

Judge vindicates Oregon farms in ‘hot goods’ case

A federal judge has vacated consent judgments that were signed by two Oregon blueberry farms at the behest of the U.S. Department of Labor (DOL) in 2012. The judge’s decision was a victory for the farms, according to their attorney, Tim Bernasek.

“We feel good about the opinion,” Bernasek said. “We got all we were asking for.”

The two farms, Pan-American Berry Growers and B&G Ditchen Farms, sued DOL in August 2013, seeking to vacate the consent judgments they claim they were forced to sign in order to lift a “hot goods” objection that blocked the sale of their perishable berries. On Jan. 15, Thomas Coffin, federal magistrate judge for the district of Oregon, agreed with the growers and rendered the consent judgments moot.

“To avoid the potential loss of millions of dollars worth of berries, (growers) had to agree to the DOL’s allegations without an opportunity to present a defense or confront the DOL’s evidence in an administrative or court hearing,” according to Coffin’s ruling.

DOL has until Feb. 28 to seek a review of Coffin’s decision, but even if that happens it’s unlikely the judgment will be altered, Bernasek said.

“The judge’s decision is a great relief,” said Gregg Ditchen, owner of B&G Ditchen Farms. “(DOL’s) heavy handed misuse of its ‘hot goods’ authority in 2012 threatened our crops and put our family farm at risk. Judge Coffin made clear that the Constitution’s due process requirements prohibit the kind of financial duress the department used to force us to pay penalties without ever detailing the basis for their claim we’d violated the law.”

“We’re grateful the court agreed with us that (DOL) effectively put a gun to our heads, halting our ability to sell blueberries worth millions of dollars that were ready for harvest in our fields,” said Steve Erickson, manager of Pan-American Berry Growers. “Hopefully, this decision will keep the department from using ‘hot goods’ objections to force other farmers to pay unjustified penalties or risk losing their highly perishable crops.”

In August 2012, DOL investigators threatened Pan-American, B&G Ditchen and another grower, E&S Farms, with the “hot goods” provision of the Fair Labor Standards Act, for what DOL called “improper wage practices” on the part of the farms.

Hot goods orders are the labor department’s “most extreme enforcement mechanism,” which can “prevent a farmer from shipping perishable product to buyers or processors, and stop product already in the processor’s or buyer’s hands,” according to Oregon Farm Bureau (OFB).

In an April 2013 interview, Dave Dillon, OFB’s executive vice president, said the hot goods charges were “completely unusual” and “came out of the blue.” DOL rarely applies hot goods orders to agricultural operations, he said, and used “coercive tactics” to get confessions and payment penalties from the blueberry farms before they even knew what the specific charges were. The growers had to make a choice between losing a significant chunk of their perishable crop or paying penalties.

The growers chose to pay the penalties, which ranged from $40,000 to more than $160,000, according to OFB.

If and when Coffin’s judgment becomes final, Pan-American and B&G Ditchen will seek to get their money back, their attorney said.

Bernasek said Coffin’s judgment represents a significant victory for agriculture. He would be surprised if DOL tries to use its hot goods authority in the same manner it did in Oregon’s blueberry fields in 2012.

– Matt Milkovich