California Assembly Bill AB2240 Amended / Bill

 BILL NUMBER: AB 2240AMENDED BILL TEXT AMENDED IN SENATE JUNE 21, 2010 AMENDED IN ASSEMBLY MAY 3, 2010 AMENDED IN ASSEMBLY APRIL 8, 2010 INTRODUCED BY Assembly Member Ma FEBRUARY 18, 2010 An act to amend Sections 55722.5, 55861, 55861.5, 55862.7, 56382.5, 56382.8, 56571, and 56571.5 of, and to amend and renumber Section 56189 of, the Food and Agricultural Code, relating to agriculture. LEGISLATIVE COUNSEL'S DIGEST AB 2240, as amended, Ma. Agriculture: processors of farm products: dealers: licensing: fees. Existing law requires processors and cash buying processors of farm products to be licensed and to pay to the Department of Food and Agriculture an annual license application fee in accordance with a specified schedule determined by the annual dollar volume of business based on farm product volumes. The department is required to reevaluate that fee structure based on operating costs in fiscal years 1998-99 and 1999-2000 and to submit a report, with specified information, to the Legislature within 60 days subsequent to June 30, 2000. This bill, instead, would authorize the department to reevaluate the fee structure based on operating costs. The bill would also raise certain fees and delete the outdated fee structure and reporting provisions. Existing law authorizes an aggrieved grower or licensee, with a complaint not subject to certain federal laws, to seek resolution of the complaint by filing a complaint, as provided, and paying a $60 filing fee. This bill would raise the filing fee to $100. Existing law provides that the application fees are maximum fees and that the Secretary of Food and Agriculture may fix the fees at a lesser amount or adjust the fees whenever the secretary finds that the cost of administration can be defrayed with the below-maximum fees. This bill would authorize the secretary to appoint an advisory committee of producers and licensees to provide guidance in establishing those fees or to rely on input from any similar advisory committee already assembled by the secretary. Existing law requires that a person engaged in the business of buying, receiving on consignment, soliciting for sale on commission, or negotiating the sale of farm products from a licensee or producer for resale be licensed and pay to the department an annual application fee under similar terms as processors and cash buying processors of food products as described above. This bill would make analogous changes to those described above for processors and cash buying processors of farm products with respect to these licensees, including authorizing the department to reevaluate the fee structure based on operating costs, raising certain fees, deleting outdated fee structure and reporting provisions, raising the complaint filing fees, and authorizing the appointing of an advisory committee to provide guidance in establishing fees. This bill would make other technical, nonsubstantive changes. Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 55722.5 of the Food and Agricultural Code is amended to read: 55722.5. (a) An aggrieved grower or licensee with a complaint that is not subject to the federal Packers and Stockyards Act, 1921 (7 U.S.C. Sec. 181 et seq.) or the federal Perishable Agricultural Commodities Act, 1930 (7 U.S.C. Sec. 499a et seq.) may seek resolution of that complaint by filing a complaint with the department within nine months from the date a complete account of sales was due. The complaint shall be accompanied by two copies of all documents in the complainant's possession that are relevant to establishing the complaint, a filing fee of one hundred dollars ($100), and a written denial of jurisdiction from the appropriate federal agency unless the commodity involved clearly does not fall under either the federal Packers and Stockyards Act, 1921 (7 U.S.C. Sec. 181 et seq.) or the federal Perishable Agricultural Commodities Act, 1930 (7 U.S.C. Sec. 499a et seq.). Within five business days of receipt of a signed and verified complaint, the filing fee, and the denials of federal jurisdiction, the department shall serve the verified complaint on the respondent. Service shall be by certified mail. The department, the secretary, the department's employees, the department's agents, the boards and commissions associated with the department, their employees or agents, and the State of California are not parties to the dispute in a proceeding brought under this section. (b) The respondent served shall answer within 30 calendar days of service. The respondent's response shall include two copies of all relevant documentation of the transactions referred to in the verified complaint. (c) Within 30 calendar days of receipt of the answer, the department shall issue to both parties a written factual summary on the basis of the documents that have been filed with the department. (d) If a settlement is not reached within 30 calendar days after the department's summary is issued, the department, on request of the claimant or respondent and upon payment of a filing fee of three hundred dollars ($300), shall schedule alternate dispute resolution, to commence within 90 calendar days. The department shall serve both parties with a notice of hearing, which sets out the time, date, street address, room number, telephone number, and name of the hearing officer. Service of the notice of hearing shall be by certified mail. (e) The alternate dispute resolution shall proceed as follows: (1) The hearing shall be conducted by hearing officers in accordance with standard procedures promulgated by the American Arbitration Association or other acceptable alternative dispute resolution entities. (2) The hearing officers shall be familiar with the type of issues presented by those claims, but need not be attorneys. (3) The sole parties to the proceedings shall be the complainant and the respondent. (4) The disputes, claims, and interests of the department or the State of California are not within the jurisdiction of the proceedings. (5) The validity of a regulation of the department or order promulgated pursuant to this code is not within the jurisdiction of the proceedings. (6) Law and motion matters shall be handled by the assigned hearing officer. (7) The hearing officer has no authority to enter into settlement discussions except upon stipulation of the parties involved. (8) The parties may represent themselves in propria persona or may be represented by a licensed attorney at law. A party may not be represented by a representative who is not licensed to practice law. (9) To the extent of any conflict between any provision of Chapter 4.5 (commencing with Section 11400) of Part 1 of Division 3 of Title 2 of the Government Code and this article, this article shall prevail. (10) The hearing officer may order a review of records or an audit of records by a certified public accountant. The review or audit shall be conducted under generally accepted auditing standards of the American Institute of Certified Public Accountants, and upon completion of the review or audit the nature and extent of the review or audit shall be disclosed to the parties by the auditor in the audit report. The audit report shall disclose the number of transactions reviewed and the rationale for selecting those transactions. The department shall advance the costs of the audit or review of records, but the hearing officer shall apportion the costs at the conclusion of the hearing. The department shall pursue repayment in accordance with the hearing officer's apportionment and may bring an action in a court of competent jurisdiction to recover funds advanced. Nothing in this subdivision shall be construed to require the department to pursue any specific remedy or to prohibit the department from accepting a reasonable repayment plan. (f) The hearing officer shall render a written decision within 60 days of submission of the case for decision. In addition to rendering a written finding as to what is owed by whom on the substantive allegations of the complaint, the hearing officer shall decide whether or not to order the full cost of the alternative dispute resolution proceeding, and in what ratio or order the losing party is to pay the costs of the proceeding. For these purposes, the cost of the alternative dispute resolution proceeding does not include the filing fee, the parties' attorney fees, or expert witness fees. The hearing officer may also award a sanction against a complainant for filing a frivolous complaint or against a respondent for unreasonable delay tactics, bad faith bargaining, or resistance to the claim, of either 10 percent of the amount of the award or a specific amount, up to a maximum of one thousand dollars ($1,000). Any sanction award shall not be deemed to be res judicata or collateral estoppel in any subsequent case in which either the complainant or respondent are charged with filing a frivolous complaint, unreasonable delay tactics, bad faith bargaining, or resistance to the claim. The department may consider the written decision of the hearing officer in determining any related licensing action. The written decision of the hearing officer may be introduced as evidence at a court proceeding. (g) Nothing in this section prohibits the parties to the dispute from settling their dispute prior to, during, or after the hearing. (h) Nothing in this section alters, precludes, or conditions the exercise, during any stage of the proceedings provided by this chapter, of any other rights to relief a party may have through petition to a court of competent jurisdiction, including, but not limited to, small claims court. SEC. 2. Section 55861 of the Food and Agricultural Code is amended to read: 55861. (a) Except as otherwise provided in this article or in Section 56574, each applicant for a license shall pay to the department a fee in accordance with the schedule in subdivision (b), except that an agent shall pay fifty-five dollars ($55) for each license period of the principal. (b) The amount of the fee due each year from the applicant shall be determined by the annual dollar volume of business based on the value of the farm products that is returned to the grower, as follows: (1) For a dollar volume of less than twenty thousand dollars ($20,000), the fee shall be one hundred  fifty   thirty-six  dollars  ($150)   ($136)  . (2) For a dollar volume of twenty thousand dollars ($20,000) and over, but less than fifty thousand dollars ($50,000), the fee shall be two hundred dollars ($200). (3) For a dollar volume of fifty thousand dollars ($50,000) and over, but less than two million dollars ($2,000,000), the fee shall be three hundred dollars ($300). (4) For a dollar volume of two million dollars ($2,000,000) and over, the fee shall be four hundred dollars ($400). (c) The department may reevaluate the fee structure based on operating costs. The fees shall adequately cover the costs to fully administer and operate the program in an effective and efficient manner. SEC. 3. Section 55861.5 of the Food and Agricultural Code is amended to read: 55861.5. The fees provided by Section 55861 are maximum fees. The secretary may fix those fees at a lesser amount, and may adjust those fees from time to time, whenever the secretary finds that the cost of administering this chapter can be defrayed with those below-maximum fees. The secretary may appoint an advisory committee of producers and licensees to provide guidance in establishing those fees or may rely on input from any similar advisory committee already assembled by the secretary. SEC. 4. Section 55862.7 of the Food and Agricultural Code is amended to read: 55862.7. (a) If any person is found to be operating a business without the license required by Section 55521, or failed to pay a fee in accordance with the schedule in subdivision (b) of Section 55861, that person shall pay to the secretary double the amount of the license fee due pursuant to this chapter. (b) In addition to subdivision (a), if any person is found to be operating a business within the past five years without a license required by Section 55521, or failed to pay the fees in accordance with the schedule in subdivision (b) of Section 55861, that person shall pay to the secretary an amount equal to that portion of the fees that were not paid for the last five years the business has operated. SEC. 5. Section 56189 of the Food and Agricultural Code, as added by Section 67 of Chapter 696 of the Statutes of 1997, is amended and renumbered to read: 56189.2. In addition to the other requirements of this chapter, each application for a license, except for a cash buyer's license, shall include an affidavit in which the applicant affirms that he or she is current in making all payments required under undisputed contract agreements, and that he or she will do all of the following: (a) Abide by all provisions of this chapter and Chapter 6 (commencing with Section 55401). (b) Will prepare and retain financial records adequate to document all transactions with suppliers. (c) Will prepare and retain current financial information, including, but not limited to, profit-and-loss statements and a balance sheet that presents fairly the financial condition as of the applicant's most recent yearend. The affidavit shall be on a form prescribed by the secretary and shall be submitted under penalty of perjury. SEC. 6. Section 56382.5 of the Food and Agricultural Code is amended to read: 56382.5. (a) An aggrieved grower or licensee with a complaint that is not subject to the federal Packers and Stockyards Act, 1921 (7 U.S.C. Sec. 181 et seq.) or the federal Perishable Agricultural Commodities Act, 1930 (7 U.S.C. Sec. 499a et seq.) may seek resolution of that complaint by filing a complaint with the department within nine months from the date a complete account of sales was due. The complaint shall be accompanied by two copies of all documents in the complainant's possession that are relevant to establishing the complaint, a filing fee of one hundred dollars ($100), and a written denial of jurisdiction from the appropriate federal agency unless the commodity involved clearly does not fall under the federal Packers and Stockyards Act, 1921 (7 U.S.C. Sec. 181 et seq.) or the federal Perishable Agricultural Commodities Act, 1930 (7 U.S.C. Sec. 499a et seq.). Within five business days of receipt of a signed and verified complaint, the filing fee, and the denials of federal jurisdiction, the department shall serve the verified complaint on the respondent. Service shall be by certified mail. The department, the secretary, the department's employees, the department's agents, the boards and commissions associated with the department, their employees or agents, and the State of California are not parties to the dispute in a proceeding brought under this section. (b) The respondent served shall answer within 30 calendar days of service. Respondent's response shall include two copies of all relevant documentation of the transactions referred to in the verified complaint. (c) Within 30 calendar days of receipt of the answer, the department shall issue to both parties a written factual summary on the basis of the documents that have been filed with the department. (d) If a settlement is not reached within 30 calendar days after the department's summary is issued, the department, on request of the claimant or respondent and upon payment of a filing fee of three hundred dollars ($300), shall schedule alternate dispute resolution, to commence within 90 calendar days. The department shall serve both parties with a notice of hearing, which sets out the time, date, street address, room number, telephone number, and name of the hearing officer. Service of the notice of hearing shall be by certified mail. (e) The alternate dispute resolution shall proceed as follows: (1) The hearing shall be conducted by hearing officers in accordance with standard procedures promulgated by the American Arbitration Association or other acceptable alternative dispute resolution entities. (2) The hearing officers shall be familiar with the type of issues presented by such claims, but need not be attorneys. (3) The sole parties to the proceedings shall be the complainant and the respondent. (4) The disputes, claims, and interests of the department or the State of California are not within the jurisdiction of the proceedings. (5) The validity of a regulation of the department or order promulgated pursuant to this code is not within the jurisdiction of the proceedings. (6) Law and motion matters shall be handled by the assigned hearing officer. (7) The hearing officer has no authority to enter into settlement discussions except upon stipulation of the parties involved. (8) The parties may represent themselves in propria persona or may be represented by a licensed attorney at law. A party may not be represented by a representative who is not licensed to practice law. (9) To the extent of any conflict between any provision of Chapter 4.5 (commencing with Section 11400) of Part 1 of Division 3 of Title 2 of the Government Code and this article, this article shall prevail. (10) The hearing officer may order a review of records or an audit of records by a certified public accountant. The review or audit shall be conducted under generally accepted auditing standards of the American Institute of Certified Public Accountants, and upon completion of the review or audit the nature and extent of the review or audit shall be disclosed to the parties by the auditor in the audit report. The audit report shall disclose the number of transactions reviewed and the rationale for selecting those transactions. The department shall advance the costs of the audit or review of records, but the hearing officer shall apportion the costs at the conclusion of the hearing. The department shall pursue repayment in accordance with the hearing officer's apportionment and may bring an action in a court of competent jurisdiction to recover funds advanced. Nothing in this subdivision shall be construed to require the department to pursue any specific remedy or to prohibit the department from accepting a reasonable repayment plan. (f) The hearing officer shall render a written decision within 60 days of submission of the case for decision. In addition to rendering a written finding as to what is owed by whom on the substantive allegations of the complaint, the hearing officer shall decide whether or not to order the full cost of the alternative dispute resolution proceeding, and in what ratio or order the losing party is to pay the costs of the proceeding. For these purposes, the cost of the alternative dispute resolution proceeding does not include the filing fee, the parties' attorney fees, or expert witness fees. The hearing officer may also award a sanction against a complainant for filing a frivolous complaint or against a respondent for unreasonable delay tactics, bad faith bargaining, or resistance to the claim, of either 10 percent of the amount of the award or a specific amount, up to a maximum of one thousand dollars ($1,000). Any sanction award shall not be deemed to be res judicata or collateral estoppel in any subsequent case in which either the complainant or respondent  are   is  charged with filing a frivolous complaint, unreasonable delay tactics, bad faith bargaining, or resistance to the claim. The department may consider the written decision of the hearing officer in determining any related licensing action. The written decision of the hearing officer may be introduced as evidence at a court proceeding. (g) Nothing in this section prohibits the parties to the dispute from settling their dispute prior to, during, or after the hearing. (h) Nothing in this section alters, precludes, or conditions the exercise, during any stage of the proceedings provided by this chapter, of any other rights to relief a party may have through petition to a court of competent jurisdiction, including, but not limited to, small claims court. SEC. 7. Section 56382.8 of the Food and Agricultural Code is amended to read: 56382.8. (a) In addition to all other complaint procedures provided for in this chapter, any aggrieved grower or licensee with a complaint that is not subject to the federal Packers and Stockyards Act, 1921 (7 U.S.C. Sec. 181 et seq.) or the federal Perishable Agricultural Commodities Act, 1930 (7 U.S.C. Sec. 499a et seq.) and for which the claim for damages does not exceed thirty thousand dollars ($30,000), may file a verified complaint with the department, subject to expedited review and settlement. Informal complaints may be made for damages, but not for disciplinary action, although the department may issue a complaint pursuant to Section 56382 as the basis for disciplinary action. Informal complaints must be received by the department within nine months of when the claimant ought to have reasonably known of its existence, as required under Section 56446. (b) Complaints must be submitted to the department in writing and verified, and may be transmitted via United States mail, overnight delivery, or by facsimile transmission, setting forth the essential details of the transactions complained of, including the following: (1) The name and address of each party to the dispute, of the agent representing him or her in the transaction involved, if any, as well as the party's counsel, if any. (2) The quantity and quality or grade of each kind of produce shipped if a grade or quality is the basis of payment. (3) The date of shipment. (4) The carrier identification if a carrier was used. (5) The shipping and destination points. (6) If a sale, the date, sales price, and amount actually received. (7) If a consignment, the date, reported proceeds, gross, and net. (8) A precise estimate of the amount of damages claimed, if known. (9) A brief statement of material facts in dispute, including terms of applicable contracts. (10) The amount of damages being sought. (c) The complaint shall also, so far as practicable, be accompanied by true copies of all available papers relating to the transaction complained about, including shipping documents, letters, telegrams, invoices, manifests, inspection certificates, accountings, accounts of sale, and any special contracts or agreements. (d) The informal complaint shall be accompanied by a nonrefundable filing fee of one hundred dollars ($100) as required under Section 56382.5. (e) Upon confirmation that a complaint has been properly and timely filed, including the securing of a denial letter from the United States Department of Agriculture under the federal Packers and Stockyards Act, 1921, or the federal Perishable Agricultural Commodities Act, 1930, the department shall send a copy of the complaint to the respondent by certified mail and advise the respondent that it shall have 30 days from the department's mailing of the complaint in which to answer the complaint. The answer shall contain a brief response to the complaint, including the respondent's position with respect to the claimant's description of matters in dispute, the relevant facts, and the remedy sought, together with a description of any claims it may have against the complainant, in the same manner as claims are to be set out in the complaint. The respondent shall also include any pertinent documentation relevant to its defense with its answer. (f) After receipt of the answer from the respondent, the department shall informally consult with the parties to clarify the nature of the dispute and to facilitate the exchange of information between the parties in order to assist the parties in reaching an expedited informal resolution of the dispute. The informal consultation process will last no longer than 60 days. The parties shall cooperate fully with the department and shall participate in the informal consultation process. (g) If the informal consultation process provided for in this section does not result in resolution of the dispute, the complainant may then pursue arbitration against the licensee and the complaint and any counterclaim will be fully and finally adjudicated and resolved by a decision of an arbitrator under expedited arbitration procedures as follows: (1) The complainant shall submit a fee of six hundred dollars ($600) to the department made payable to the arbitrator, arbitration service, or payee designated by the department for the arbitration and any counterclaimant shall submit a fee of six hundred dollars ($600) to the department for any counterclaim that is filed also made payable to the arbitrator, arbitration service, or payee designated by the department. (2) An arbitrator from a panel of arbitrators registered with the department shall be selected by the department and confirmed by both the complainant and the respondent or counterclaimant after the prospective arbitrator has certified that he or she has no known conflict of interest in the dispute and after each party has had an opportunity to lodge an objection for cause to the appointment of the named arbitrator within five days of its receipt of the notice of appointment of the arbitrator. The notice of appointment shall be in writing and may be transmitted via overnight delivery or by facsimile transmission. (3) Upon confirmation of the appointment of the arbitrator the department will transmit to the arbitrator the verified complaint, the statement of defense, and the statement of counterclaim, if one is filed. (4) The complainant shall have 30 days after receipt of the notice of appointment of the arbitrator to submit to the department in writing sworn declarations by witnesses and any other documentary evidence not previously submitted, as well as legal authorities and arguments. (5) Within five days of the department's receipt of the complainant's written submission the department shall transmit a copy of the complainant's written submission to the respondent. The respondent shall have 30 days from the receipt of the complainant's written submission to submit to the department in writing responsive declarations by witnesses or other documentary evidence not previously submitted, as well as any legal authorities and arguments. The respondent's written submission in support of its counterclaim, if any, must be sent to the department at the same time as the responsive submission. (6) If there is a counterclaim filed, within five days of the department's receipt of the counterclaimant's written submission the department shall transmit a copy of the counterclaimant's written submission to the complainant. The complainant shall have 10 days from the receipt of the counterclaimant's written submission to submit any witness statements, evidence, or legal authorities and arguments in reply. (7) Once all periods for submission of evidence and arguments have expired and the department has transmitted all written submissions to the arbitrator, the case and all evidence to be considered by the arbitrator shall be deemed to be submitted. (8) The arbitrator may, in the interest of justice, briefly extend the time periods for written submissions by either party. (9) The arbitrator shall issue his or her arbitration decision and award in writing within 30 days after the case has been submitted for a decision. This time period may be extended by the arbitrator if, in his or her judgment, clarification of the evidence submitted is required from either the complainant, the respondent or counterclaimant, or both. (10) No hearings or live testimony shall be conducted under the expedited arbitration procedures. (11) The arbitrator shall award interest at the legal rate to be paid in addition to any damages that are awarded and the arbitrator may award the recovery of costs to one party to the arbitration or apportion costs between the parties as he or she deems appropriate. Costs may include filing fees, mediation fees and expenses, fees or expenses incurred by the department, and fees paid to expert witnesses, auditors, or inspectors, but not attorney's fees, unless there has been an agreement by the parties that the prevailing party in any dispute shall be entitled to recover reasonable attorney's fees as part of any award for damages, and in that case, the arbitrator may award reasonable attorney's fees to the prevailing party. (h) Either party to an expedited arbitration proceeding conducted pursuant to this section may bring an action in any California court of competent jurisdiction to enforce any awards for damages made pursuant to this section. If an enforcement action is necessary to secure payment of awards for damages, the party initiating the enforcement proceeding shall be entitled to recover all additional expenses, costs  ,  and  attorneys'   attorney's  fees incurred in connection with that proceeding. (i) The department shall retain jurisdiction, as provided for under Section 56445, over any matter in which a licensee refuses to pay or otherwise comply with an arbitrator's decision conducted pursuant to the expedited arbitration procedures as set forth herein, and may immediately commence an action to revoke the license of the licensee. (j) A complainant may enforce his or her rights through the verified complaint and expedited arbitration process as provided herein, or by a civil action brought in any court of competent jurisdiction. This section shall in no way abridge, preclude, or alter other remedies available to the parties now existing under common law or by statute, and the provisions set forth herein are in addition to those other remedies. SEC. 8. Section 56571 of the Food and Agricultural Code is amended to read: 56571. (a) Except as otherwise provided in this article or Section 55863, each applicant for a license shall pay to the department a fee in accordance with the schedule in subdivision (b), except that an agent shall pay fifty-five dollars ($55) for each license period of the principal. (b) The amount of the fee due each year shall be determined by the annual dollar volume of business based on farm product value returned to the grower or licensee, as follows: (1) For a dollar volume of less than twenty thousand dollars ($20,000), the fee shall be one hundred  fifty   thirty-six  dollars  ($150)   ($136)  . (2) For a dollar volume of twenty thousand dollars ($20,000) and over, but less than fifty thousand dollars ($50,000), the fee shall be two hundred dollars ($200). (3) For a dollar volume of fifty thousand dollars ($50,000) and over, but less than two million dollars ($2,000,000), the fee shall be three hundred dollars ($300). (4) For a dollar volume of two million dollars ($2,000,000) and over, the fee shall be four hundred dollars ($400). (c) The department may reevaluate the fee structure based on operating costs. The fees shall adequately cover the costs to fully administer and operate the program in an effective and efficient manner. SEC. 9. Section 56571.5 of the Food and Agricultural Code is amended to read: 56571.5. The fees provided by Section 56571 are maximum fees. The secretary may fix those fees at a lesser amount, and may adjust those fees from time to time, whenever the secretary finds that the cost of administering this chapter can be defrayed with those below-maximum fees. The secretary may appoint an advisory committee of producers and licensees to provide guidance in establishing those fees or may rely on input from any similar advisory committee already assembled by the secretary.