                                    NOT PRECEDENTIAL
       UNITED STATES COURT OF APPEALS
            FOR THE THIRD CIRCUIT
                 _____________

                     No. 11-3231
                    _____________

         EMPIRE KOSHER POULTRY, INC.,

                                          Petitioner

                           v.

UNITED STATES DEPARTMENT OF AGRICULTURE;
        UNITED STATES OF AMERICA,

                                       Respondents
                   _______________

        On Petition for Review of an Order of the
         United States Department of Agriculture
               (P&S D.C. No. D-10-0109)
        Judicial Officer: Hon. William G. Jenson
                    _______________

       Submitted Under Third Circuit LAR 34.1(a)
                   March 29, 2012

Before: FUENTES, SMITH, and JORDAN, Circuit Judges.

                 (Filed April 12, 2012)
                   _______________

              OPINION OF THE COURT
                  _______________
JORDAN, Circuit Judge.

       Empire Kosher Poultry, Inc. (“Empire”) petitions for review of the July 20, 2011

decision and order of the Secretary of the U.S. Department of Agriculture (“the

Secretary”) determining that Empire violated Section 410 of the Packers and Stockyards

Act (“the Act”), 7 U.S.C. § 228b-1, by failing to make timely payments for the purchase

of live poultry. The Secretary assessed an $18,000.00 fine for that violation. For the

reasons that follow, we will deny the petition for review.

I.     Background

       Empire is a live poultry dealer that operates a kosher chicken and turkey

processing plant in Pennsylvania. Koch’s Turkey Farm (“Koch”) also operates a turkey

processing facility. Between April and June 2008, Empire entered into an agreement to

provide Trader Joe’s Company, Inc. (“Trader Joes”) with 43,200 antibiotic-free (“ABF”)

turkeys beginning the week of November 3, 2008. In order to acquire the turkeys

necessary to fulfill that obligation, Empire contacted Duane Koch (“Mr. Koch”), an

owner and the vice president and general manager of Koch, who agreed to sell Empire

live ABF turkeys for $.70 per pound. At the time, Empire and Koch did not reach an

agreement concerning the terms of payment.1



       1
          The Secretary found that the parties “did not have an express agreement
concerning credit terms prior to Empire’s purchase of turkeys in any of the transactions at
issue in the instant proceeding.” (App. at 11A.) Although the parties dispute that finding
in their briefs, we must defer to the Secretary’s finding of fact, to the extent that it is
supported by “substantial evidence” in the record. See 5 U.S.C. § 706(2)(E). Here, as
discussed infra, there is evidence in the record which supports the Secretary’s finding
concerning the parties’ agreement. Thus, we assume for the purpose of our recitation of
                                             2
       Koch made several turkey deliveries to Empire between August and September

2008 that are relevant to this appeal.2 It delivered four truckloads on August 13 and 14.

The first truckload and eighty-four turkeys from the second truckload were unloaded and

processed on August 14. However, Empire rejected the remaining turkeys because they

failed to pass USDA and rabbinical inspections. Thereafter, Koch delivered four

truckloads of live turkeys on August 20, five truckloads on September 3 and 4, four

truckloads on September 5, and four truckloads on September 8.

       Shortly after each delivery, Mr. Koch sent Empire an invoice, requesting payment

within fourteen days.3 Mr. Koch said that the fourteen-day payment period was

important because Koch needed to compensate its suppliers within fourteen days.

However, Empire disagreed with Mr. Koch’s proposed payment period, ultimately failing

to pay Koch within fourteen days of each of the disputed deliveries. When Mr. Koch

called Jeffrey Brown, Empire’s chief operating officer, to inquire about the delinquent

payments, the discussion turned to the dispute about the quality of the birds that had

failed inspections and Brown told him to send more turkeys if he wanted to get paid. On

September 24, 2008, Koch contacted the USDA’s Grain Inspection, Packers &


the facts, that the parties did not reach “an express agreement concerning credit terms.”
(App. at 11A.)
       2
         Koch also delivered live ABF turkeys to Empire on August 6, 2008. However,
the complaint filed against Empire does not allege that Empire violated the Act by failing
to pay for the August 6 delivery in a timely manner.
       3
         On August 25, 2008, Koch sent Empire an invoice for the August 13, 14, and 20
deliveries. It sent invoices for the September 3, 4, and 5 deliveries on September 10, and
for the September 8, 2008 delivery on September 17, 2008.
                                             3
Stockyards Administration (“GIPSA”) seeking assistance in its efforts by Koch to secure

payment from Empire. As a result, GIPSA began an investigation. Empire did not pay

Koch in full until November 3, 2008.

       On February 4, 2010, a deputy administrator from the Department of Agriculture

filed a complaint against Empire alleging that Empire willfully violated the Act by

delaying payment for the live ABF turkeys it purchased from Koch. On March 8, 2011,

an Administrative Law Judge (“ALJ”) issued a decision and order concluding that

Empire violated Section 410 of that act, codified at 7 U.S.C. § 228b-1(a),4 because it had

failed to pay for the turkeys within the time period required by the statute. The ALJ

ordered Empire to “cease and desist from failing to pay for poultry purchases within the

time period required by Section 410 of the Act,” and assessed an $18,000.00 civil penalty

against Empire for the tardy payments. (App. 53A.) Empire appealed that decision and

order to the Department of Agriculture’s Judicial Officer (the “JO”),5 who adopted the

ALJ’s decision and order.


       4
           Section 228b-1(a) provides, in relevant part:

                [e]ach live poultry dealer obtaining live poultry by purchase
                in a cash sale shall, before the close of the next business day
                following the purchase of poultry … deliver, to the cash seller
                … from whom such live poultry dealer obtains the poultry,
                the full amount due to such cash seller … on account of such
                poultry.

7 U.S.C. § 228b-1(a).
       5
         Pursuant to 7 C.F.R. § 2.35(a)(1), the Secretary has delegated authority to the JO
to serve as an officer with final decisionmaking authority in U.S. Department of
Agriculture adjudicatory proceedings subject to 5 U.S.C. §§ 556 and 557.
                                               4
       In so doing, the JO found that Empire and Koch “did not have an express

agreement concerning credit terms prior to Empire’s purchase of turkeys in any of the

transactions” in dispute. (App. at 11A.) The JO also determined that, because Koch “did

not expressly extend credit to Empire prior to the transactions,” the transactions

“constituted live poultry … cash sales … requiring Empire to pay within the time

required by 7 U.S.C. § 228b-1(a).” (App. at 16A.) The JO further concluded that

“Empire’s failure to pay for live poultry purchased, received, and accepted within the

time period required for payment in a cash sale … constitute[d] an unfair practice, in

willful violation of the [Act].” (App. at 16A.) The JO’s decision automatically became

the decision of the Secretary. See supra note 3.

       Empire then filed this timely petition for review.

II.    Jurisdiction and Standard of Review

       The Secretary had jurisdiction over this enforcement action pursuant to 7 U.S.C.

§ 228b-2(a),6 and we have jurisdiction over Empire’s petition for review pursuant to 28

U.S.C. § 2342(2) and 7 U.S.C. § 228b-3(h). Pursuant to the Administrative Procedures

Act, we review the Secretary’s decisions under a deferential standard, determining

whether the Secretary’s findings of fact are supported by substantial evidence. 5 U.S.C.


       6
         The Secretary has the authority to enforce the provisions of the Act, which
includes, among other things, the authority to (1) “cause a complaint in writing to be
served upon … live poultry dealer[s],” (2) promulgate regulations governing hearings
related to its enforcement authority, and (3) issue appropriate penalties for violations of
§ 228b-1 such as cease and desist orders and civil penalties. See 7 U.S.C. § 228b-2(a),
(b). Thus, Congress “expect[s] the [Secretary] to be able to speak with the force of law”
in his or her enforcement actions. United States v. Mead Corp., 533 U.S. 218, 229
(2001).
                                             5
§ 706(2)(E). We review the Secretary’s conclusions of law de novo, Nat’l Indus. Sand

Assoc. v. Marshall, 601 F.2d 689, 699 n.34 (3d Cir. 1979), and accord the Secretary’s

reasonable interpretations of ambiguous provisions in the Act appropriate deference, see

Chevron, U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 844 (1984)

(requiring deference to reasonable agency interpretations of the statutes they administer).

Finally, we review the Secretary’s choice of sanction for abuse of discretion, Baiardi

Food Chain v. United States, 482 F.3d 238, 240 (3d Cir 2007), overturning the prescribed

sanction only when it is “unwarranted in law or … without justification in fact.” Butz v.

Glover Livestock Comm’n Co., Inc., 411 U.S. 182, 185-86 (1973) (internal quotation

marks and citation omitted).

III.   Discussion

       A.     The Packers and Stockyards Act

       “The primary purpose of [the Act] is to assure fair competition and fair trade

practices in livestock marketing and in the meatpacking industry.” H.R. Rep. No. 85-

1048, at 1 (1957), reprinted in 1958 U.S.C.C.A.N. 5212, 5213. The statute was amended

in 1987 to deal with, among other things, “the length of time some poultry producers are

forced to wait for payment for their product or services,” because, during those delays

“producers must continue to pay their own operating and other expenses.” H.R. Rep. No.

100-397, at 7 (1987), reprinted in 1987 U.S.C.C.A.N. 855, 857 (the Poultry Producers

Financial Protection Act of 1987).




                                             6
       Section 410 of the Act governs the sale of live poultry by “live poultry dealer[s].”7

As noted earlier, supra n. 4, it provides that a live poultry dealer purchasing poultry in a

cash sale must pay the full amount due the next business day after purchase is made. 7

U.S.C. § 228b-1(a). The Act defines “cash sale” as “a sale in which the seller does not

expressly extend credit to the buyer,” though the Act does not go on to specify what

“expressly” means. 7 U.S.C. § 228b-1(c). The parties agree that these conditions hold,

unless the seller “expressly extend[s] credit” to the live poultry dealer. 7 U.S.C. § 228b-

1(a), (c).

       B.     Whether Empire Violated § 228b-1 by Failing to Pay Koch for the Disputed
              Turkey Deliveries in a Timely Manner

       To determine whether substantial evidence supports the Secretary’s decision, we

must first decide whether the disputed transactions were “cash sales” under Section 410

of the Act, which necessarily turns on our understanding of what constitutes an “express”

extension of credit. The Secretary urges us to adopt the plain and ordinary meaning of

the term, which, according to Black’s Law Dictionary, is “[c]learly and unmistakably

communicated” or “directly stated” – a definition the Secretary, through the JO, adopted

at the agency level. (App. at 18A (quoting Black’s Law Dictionary 661 (9th ed. 2009)).)

On the other hand, Empire defines the term “expressly extend credit” by reference to

certain sections of the Uniform Commercial Code (“U.C.C.”), which, it argues, provides

a basis for us to determine that Koch “expressly extend[ed] credit” by its actions as well

       7
         Empire stipulates that it is a live poultry dealer under the Act, and we agree. See
7 U.S.C. § 182(10) (defining a “live poultry dealer” as a “person engaged in the business
of obtaining live poultry by purchase … for the purpose of … slaughtering it”).
                                              7
as the parties’ “course of performance, course of dealing, and usage of trade.”8

(Petitioner’s Opening Br. 17, 29 (citations omitted).)

       In deciding whether to adopt the Secretary’s interpretation of the Act, we apply the

principles set forth in Chevron. Under that standard, we “must first determine if the

statute is silent or ambiguous with respect to the specific issue of law in the case, using

traditional tools of statutory construction to determine whether Congress had an intention

on the precise question at issue.” Lin-Zheng v. Att’y Gen., 557 F.3d 147, 155 (3d Cir.

2009) (en banc) (internal quotation and citation omitted). “If congressional intent is

clear, the inquiry ends, as both the agency and the court must give effect to the plain

language of the statute.” Id. (internal citation and quotation omitted). Consistent with

those principles, here, we need look no further than the plain text of the statute to

determine Congress’s intent. While the Act does not define the term “express,” it has a

plain and ordinary meaning: “directly, firmly, and explicitly stated.” Merriam-Webster’s


       8
         Specifically, Empire relies upon Sections 2-204, 2-206, and 2-207 of the U.C.C.
However, none of those sections explain what it means to “expressly” extend credit under
the Act. Section 2-204 addresses the conditions under which parties may “show
agreement” when forming a contract; it does not explain what it means for a party to
“expressly” extend credit, as required by § 228b-1. U.C.C. § 2-204(1)-(3). Similarly,
Section 2-206 does not define the terms “expressly extend credit,” but instead prescribes
conduct that, under the appropriate circumstances, may constitute acceptance of an offer
for the sale of goods. Id. § 2-206. Section 2-207 explains that a party may accept an
offer with a “definite and seasonable expression of acceptance or written confirmation …
sent within a reasonable time … even though it states terms additional to or different
from those offered or agreed upon,” a proposition that, while perhaps true generally, does
not advance Empire’s position because Koch did not send Empire invoices for any of the
disputed deliveries before the statutorily prescribed period for payment had lapsed, as
required by the PSA. Id. § 2-207; see infra n.9.
                                              8
Collegiate Dictionary 409 (10th ed. 2002). There is nothing the least ambiguous about

the word. If a seller and buyer want to agree on credit terms, that must be done in a

communication that is “direct[], firm[], and explicit[],” or, as the JO put it, “clear and

unmistakable,” (App. 18A.) Thus, we begin, and end, our inquiry under the first step of

the Chevron analysis, concluding that, under Section 410 of the Act, a sale of live poultry

is a cash sale unless a seller “directly, firmly, and explicitly state[s]” its intent to extend

credit.

          In light of that plain meaning of the word “express,” we turn to the task of

determining whether substantial evidence supports the Secretary’s finding that Koch did

not expressly extend credit to Empire, and that Empire failed to pay Koch before the

expiration of the statutorily prescribed period for payment. As to the first issue, the

record supports the Secretary’s finding that Koch did not expressly extend credit to

Empire. When Empire informed Koch that it would only agree to “reasonable”

repayment terms, Koch did not state expressly (either verbally or in writing) that he

intended to extend credit to Empire. In addition, Mr. Koch testified that, at the time the

parties negotiated the disputed turkey sales, they never discussed credit terms. Moreover,

when the parties eventually discussed payment terms, they could not reach an agreement

concerning the payment period. Koch refused to agree to the thirty-day term of payment

proposed by Empire, and Empire rejected the fourteen-day terms proposed by Koch in its

invoices.9 Thus, because substantial evidence supports the Secretary’s determination that


          9
       Empire’s argument that Koch’s invoices, which contained a proposed 14-day
payment period, serve as evidence that Koch expressly extended credit is unpersuasive.
                                                9
Koch did not “expressly extend credit” to Empire before any of the disputed transactions,

the parties’ contract was a “cash sale” under Section 410.

       As to the second issue, the evidence of record demonstrates, and it is not disputed,

that Empire failed to pay Koch for any of the disputed deliveries before “the close of the

next business day following [Empire’s] purchase[s].” 7 U.S.C. § 228b-1(a). As noted

earlier, Empire did not provide Koch with full payment for each of the disputed deliveries

until November 3, 2008 – well beyond “the close of the next business day” after each

delivery. Therefore, because the disputed deliveries from Koch to Empire were “cash

sales,” and because Empire failed to pay Koch in full for any of those deliveries before

“the close of the next business day” after each delivery, we hold that the Secretary’s

conclusion that Empire violated § 410 is supported by substantial evidence.



Importantly, Koch sent those invoices after the statutorily required period for payment
had already lapsed. Accepting the premise of Empire’s argument – that a live poultry
dealer is immune from liability under the Act when a seller extends credit after the
statutorily prescribed period for repayment has lapsed – would require us to read the
statute in a manner that would render its prompt payment requirement meaningless. That
is, Empire’s interpretation of the Act would allow a live poultry dealer to delay payment
and then coerce a seller into extending credit as a condition of payment. Moreover, it
conflicts with the purpose of the statute, which is to address “the length of time some
poultry producers are forced to wait for payment for their product or services.” H.R. 100-
397, at 7 (1987), reprinted in 1987 U.S.C.C.A.N. 855, 857 (the Poultry Producers
Financial Protection Act of 1987). Thus, Empire’s argument that Koch’s invoices
demonstrate that it expressly extended credit is unavailing.
        Furthermore, Empire’s assertion that its purchase orders are evidence of Koch’s
intent to extend credit is baseless. There is no evidence in the record that Koch created
those purchase orders, consented to their terms, or received them prior to when the
statutorily prescribed period for repayment lapsed. Thus, they cannot prove that Koch
“expressly extend[ed] credit” to Empire under the Act.
                                            10
       C.     Whether the $18,000.00 Assessment Was Unreasonable

       Empire also contends that the Secretary abused his discretion by approving an

$18,000.00 penalty against Empire for its late payments. Specifically, it argues that

“Empire’s temporary withholding of payment from Koch[] was not a willful act,”

“[Koch] did not want the [Department of Agriculture] to … assess any penalty against

Empire,” that the Department of Agriculture “should be attempting to promote

harmonious relationships between the … parties involved in agricultural transactions,”

and that “[t]here is no indication that Congress had any concern with protecting live

poultry dealers” in enacting the Act. (Petitioner’s Opening Br. at 38-39.) Agreeing as we

do, that harmonious relationships are a good thing, and even accepting that Koch may not

have wanted Empire to be fined, the fact remains that Empire consciously chose, in the

context of a business dispute, to withhold payment. It violated the Act.

       Under the Act, if the Secretary finds that a “live poultry dealer has violated, or is

violating … section [410] … . [he or she] may … assess a civil penalty of not more than

$20,000 for each … violation … .” 7 U.S.C. § 228b-2(b).10 In determining the

appropriate sanction, the Secretary must consider “[1] the gravity of the offense, [2] the

size of the business involved, and [3] the effect of the penalty on the [live poultry

dealer’s] ability to continue in business.” Id. The Secretary’s prescribed penalty may not



       10
         At the time the Secretary assessed the civil penalty against Empire, the
maximum statutory penalty for violating the Act was $27,000.00 per violation. See 7
C.F.R. § 3.91(b)(6)(vii) (2008). Thus, because the complaint alleged (and the Secretary
found) five violations of the Act, the Secretary had the authority to assess a maximum
$135,000.00 fine.
                                             11
“take priority over or impede the ability of the live poultry dealer to pay any unpaid cash

seller or poultry grower.” Id.

       Here, the Secretary did not abuse his discretion in assessing an $18,000.00 civil

penalty against Empire. The Secretary appropriately determined that Empire’s five

violations were significant, and noted that “[w]hen poultry dealers ignore the cash sale

payment deadline and defer payments for poultry in order to alleviate cash flow problems

or to obtain concessions from sellers, the accumulation of debts to poultry sellers creates

the very risk that Congress sought to prevent.” (App. at 23A.) The Secretary also

correctly determined that a relatively small assessment was appropriate because

“Empire’s violations involved a small number of transactions with one seller,” and

“Empire and [Koch] had a dispute over a large number of turkeys that were rejected in

one of the shipments.” (App. at 24A.) There is no evidence that the $18,000.00

assessment was excessive given the size of Empire’s business, or that the penalty would

“take priority over or impede” its ability “to pay any unpaid cash seller or poultry

grower.” 7 U.S.C. § 228b-2(b). Under these circumstances, the imposition of the

$18,000.00 assessment was not an abuse of discretion.

IV.    Conclusion

       For the foregoing reasons, we will deny Empire’s petition for review.




                                             12
