Petition for Writ of Certiorari — Wright v. United States, 24 Cl. Ct. 173 (1991) (No. 91-50)
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(\) Supreme Court, U.S
FILED
81-50 JUN 11 199)
IN THE | OFFICE OF THE CLERK
SUPREME COURT OF THE UNITE
OCTOBER TERM, 1990
No.
FREDERICK L. WRIGHT, III, and MARJORIE
WRIGHT, his wife, and FRED L. WRIGHT, INC.,
t/a WILLOW HILL HATCHERY, WILLOW HILL
POULTRY FARMS and WILLOW HILL POULTRY,
Petitioners,
vs.
UNITED STATES OF AMERICA,
Respondent.
CORRECTED PETITION FOR A WRIT OF CERTIORARI
To the United States Court of Appeals
for the Federal Circuit
Kenneth C. Sandoe,
Esquire
Atty. for Petitioner
36 W. Main Ave.
Myerstown, PA 17067
(717) 866-5737
Dated: June 28, 1991
QUESTIONS PRESENTED FOR REVIEW
1. The United States Court of Appeals
for the Federal Circuit has rendered a
decision in conflict with its own decision
in Julius Goldman’s Egg City v. U.S., 556
F.2d 1096 (U.S. Ct. of App. Fed. Cir.,
1977) and 697 F.2d 1051 (U.S. Ct. of App.
Fed. Cir., 1983), and committed an error of
law in interpreting the definition of fair
market value pursuant to the Federal
Indemnity Regulations of 21 U.S.C. Section
114, and 21 U.S.C. Section 134, as not
including replacement cost and a measure of
lost profits.
2. The United States Court of Appeals
for the Federal Circuit exceeded its scope
of judicial review and committed error in
reversing a finding of fact of the trial
court, where the record fully supports the
trial court’s finding and the U.S. Court of
Appeals failed to find that the trial
court’s finding was "clearly erroneous".
3. As a result of the U.S. Court of
Appeals’ error in exceeding its scope of
judicial review and disturbing the trial
court’s findings, the U.S. Court of Appeals
misapprehended the legal issue and failed
to decide whether the Respondent acted
pursuant to 21 U.S.C. Section l1l4a, 21
U.S.C. Section 134a, or both.
4. The U.S. Court of Appeals exceeded
the scope of judicial review and abused its
authority by substituting its judgment on
the credibility of expert witnesses over
that of the trial court without finding
that the trial court abused its discretion,
and where the trial court’s findings are
fully supported by the record.
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5. The U.S. Court of Appeals
committed error and abused its discretion
by affirming the admission of a hearsay
document which formed the basis of a
witness’s testimony, where the witness had
no other independent knowledge of the facts
asserted therein.
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TABLE OF CONTENTS
PARTIES TO PROCEEDINGS
REPORTS OF PRIOR OPINIONS
JURISDICTION OF COURT
STATUTES AND REGULATIONS
INVOLVED
STATEMENT OF CASE
ARGUMENT
APPENDIX
- iv -
TABLE OF AUTHORITIES
Pages
Breidor v. Sears, Roebuck &
Co. (1983, CA 3 Pa.) 722 F.2d
34 41
Cooper v. U.S., 827 F.2d 762
(Fed. Cir. 1987) 34
Dickson v. International
Harvester Company (1985, CA
5 Miss.) 754 F.2d 573 40
Julius Goldman’s Egg City v.
U.S., 556 F.2d 1096 (U.S. Ct.
of App. Fed. Cir., 1977) passim
Julius Goldman’s Egqg City v.
U.S., 697 F.2d 1051 (U.S. Ct.
of A App. Fed. Cir., 1983) passim
Lust v. Clark Equipment Co.
(1986, CA 4 Va.) 792 F.2d 436 40, 41
Rodriguez v. Olin Corp. (1986
CA 5 La.) 780 F.2d 491 41
Spesco, Inc. v. General Electric
Co. (1983, CA 7 Ind.) 719 F.2d
233 40
Geiant wv. G.8., 14 U.S. Ci. CE.
819 (1988) Be an
Wright v. U.S., 19 U.S. Cl. Ct.
590 (199)
Wright v. U.S., U.S. Ct. of App.
for the Fed. Cir., 90-5089,
-5096 (1991)
Wright v. U.S. Department of
Agriculture, No. 86, 3171, 1987
W.L. 13756, Eastern District of
PA, July 14, 1987
9 C.F.R. 53.3
9 C.F.R. Part 81.14
21 U.S.C. Section 114
21 U.S.C. Section 134
28 U.S.C.A. Section 1254(1)
28 U.S.C.A. Section 1491
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passim
passim
23
passim
15, 24
passim
passim
3
27
A. PARTIES TO PROCEEDING
All parties to this proceeding are
listed in the caption.
14,
the
819
590
for
B. REPORTS OF PRIOR OPINIONS
Be Memorandum and Order dated July
Gen wees BOG... Ge. See
Eastern Dist. of PA.
1987, Huyett,
Ba Wright v.
FF PF
(1988).
3. Wright v.
U.S.,
(1990).
4. Wright v.
44 0.8. Cl. Ct.
49 U.8. Ch. CE.
U.S., U.S. Ct. of App.
the Fed. Cir.,
90-5089,
-5096 (19991).
C. JURISDICTION OF COURT
in The date of the entry of the
judgment or decree sought to be reviewed is
February 12, 1991.
2. The date of the order denying the
Petition for Re-hearing is dated March 15,
1991.
Be The Honorable Supreme Court has
jurisdiction to review the judgments or
decrees of the U.S. Ct. of Appeals of the
Fed. Cir. in question by Writ of Certiorari
pursuant to 28 U.S.C.A. Section 1254(1).
D._ STATUTES AND REGULATIONS INVOLVED
As 21 U.S.C. Section 114a. Control
and eradication of diseases; cooperation of
States and farmers’ associations; purchase
and destruction of diseased animals;
definition. of State.
The Secretary of Agriculture, either
independently or in cooperation with States
or political subdivisions thereof, farmers’
associations and similar organizations, and
individuals, is authorized to control and
eradicate any communicable diseases of
livestock or poultry, including, but not
limited to, tuberculosis and
paratuberculosis cf animals, avian
tuberculosis, brucellosis of domestic
animals, southern cattle ticks, hog cholera
and related swine diseases, scabies in
sheep and cattle, dourine in horses,
scrapie and blue tongue in sheep, incipient
or potentially serious minor outbreaks of
Giseases of animals, and contagious or
infectious diseases of animals (such as
foot-and-mouth disease, rinderpest, and
contagious pleuropneumonia) which in the
opinion of the Secretary constitute an
emergency and threaten the livestock
industry of the country, including the
payment of claims growing out of
destruction of animals (including poultry),
and of materials, affected by or exposed to
any such disease, in accordance with such
regulations as the Secretary may prescribe.
As used in this section, the term "State"
includes the District of Columbia, Puerto
Rico, and the Territories and possessions
of the United States.
May 29, 1884, c. 60, Section ll, as
added Sept. 21, 1944, c. 412, Title I,
Section 10l(a), 58 Stat. 734, and amended
Oct. 30, 1951, c. 637, Section I, 65 Stat.
693; Aug. 8, 1953, C. 381, 67 Stat. 493;
Aug. 3, 1956, c. 950, Section 2, 70 Stat.
1032; July 2, 1962, Pub.L. 87-518, Section
7, 76 Stat. 131.
2. 21 U.S.C. Section 134a: Seizure,
quarantine, and disposal of livestock or
poultry to guard against the introduction
or dissemination of communicable disease--
Authority of Secretary
(a) The Secretary, whenever he deems
it necessary in order to guard against the
introduction or dissemination of a
communicable disease of livestock or
poultry, may seize, quarantine, and dispose
of, in a reasonable manner taking into
consideration the nature of the disease and
the necessity of such action to protect the
livestock or poultry of the United States:
(1) any animals which he finds are moving
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or are being handled or have moved or have
been handled in interstate or foreign
commerce contrary to any law or regulation
administered by him for the prevention of
the introduction or dissemination of any
communicable disease of livestock or
poultry; (2) any animals which he finds are
moving into the United States, or
interstate, and are affected with or have
been exposed to any communicable disease
dangerous to livestock or poultry; and (3)
any animals which he finds have moved into
the United States, or interstate, and at
the time of such movement were so affected
or exposed.
Determination of extraordinary
emergency due to dangerous communicable
disease; seizure, quarantine, and disposal
of animals; action authorized only if
adequate measures not taken by State or
other jurisdiction; notice to State or
other jurisdiction.
(b) Whereas the existence of any
dangerous, communicable disease of
livestock or poultry, such as foot-and-
mouth disease, rinderpest, or European fowl
pest, on any premises in the United States
would constitute a threat to livestock and
poultry of the Nation and would seriously
burden interstate and foreign commerce,
whenever the Secretary determines that an
extraordinary emergency exists because of
the outbreak of such a disease anywhere in
the United States, and that such outbreak
threatens the livestock or poultry of the
United States, he may seize, quarantine,
and dispose of, in such manner as he deems
necessary or appropriate, any animals in
the United States which he finds are or
have been affected with or exposed to any
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such disease and the carcasses of any such
animals and any products and articles which
he finds were so related to such animals as
to be likely to be a means of disseminating
any such disease: Provided, That action
shall be taken under this subsection only
if the Secretary finds that adequate
measures are not being taken by the State
or other jurisdiction. The Secretary shall
notify the appropriate official of the
State or other jurisdiction before any
action is taken in any such State or other
jurisdiction pursuant to this subsection.
Notice to owner to quarantine or to
dispose of animal, carcass, product, or
article; action on failure to comply;
costs.
(c) The Secretary in writing may
order the owner of any animal, carcass,
product, or article referred to in
subsection (a) or (b) of this section, or
the agent of such owner, to maintain in
quarantine and to dispose of such animal,
carcass, product, or article in such manner
as the Secretary may direct pursuant to
authority vested in him by such
subsections. If such owner or agent fails
to do so after receipt of such notice, the
Secretary may take action as authorized by
said subsections (a) and (b) and recover
from such owner or agent the reasonable
costs of any care, handling, and disposal
incurred by the Secretary in connection
therewith. Such costs shall not constitute
a lien against the animals, carcasses,
products, or articles involved. Costs
collected under this section shall be
credited to the current appropriation for
carrying out animal disease control
activities of the Department.
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Compensation of owner; fair market
value; payments from State or other source;
availability of funds.
(d) Except as provided in subsection
(e) of this section, the Secretary shall
compensate the owner of any animal,
Carcass, product, or article destroyed
pursuant to the provisions of this section.
Such compensation shall be based upon the
fair market value as determined by the
Secretary, of any such animal, carcass,
product, or article at the time of the
destruction thereof. Compensation paid any
owner under this subsection shall not
exceed the difference between any
compensation received by such owner from a
State or other source and such fair market
value of the animal, carcass, product, or
article. Funds in the Treasury available
for carrying out animal disease control
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activities of the Department of Agriculture
shall be used for carrying out this
subsection.
Restriction on payment of compensation
in cases of violation of law or regulation.
{(e) No such payment shall be made by
the Secretary for any animal, carcass,
product, or article which has been moved or
handled by the owner thereof or his agent
knowingly in violation of a law or
regulation administered by the Secretary
for the prevention of the interstate
dissemination of the communicable disease,
for which the animal, carcass, product, or
article was destroyed or a law or
regulation for the enforcement of which the
Secretary enters or has entered into a
cooperative agreement for the control and
eradication of such disease, or for any
animal which has moved into the United
States contrary to such law or regulation
oe 2.
AO eit Le he
administered by the Secretary for’ the
prevention of the introduction of a
communicable disease of livestock or
poultry.
Pub.L. 87-518, Section 2, July 2, 1962, 76
Stat. 129.
3. 9C.F.R. 53.3: Appraisal of animals or
materials.
(a) Animals affected be or exposed to
disease, and materials required to be
destroyed because of being contaminated by
or exposed to disease shall be appraised by
a Veterinary Services employee and a
representative of the State jointly, or, if
the State authorities approve, by a
Veterinary Services employee alone.
(b) The appraisal of animals shall be
based on the fair market value and shall be
determined by the meat, egg production,
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dairy or breeding value of such animals.
Animals may be appraised in groups
providing they are the same species and
type and providing that where appraisal is
by the head each animal in the group is the
same value per head or where appraisal is
by the pound each animal in the group is
the same value per pound.
(c) Appraisals of animals shall be
reported on forms furnished by Veterinary
Services. Reports of appraisals shall show
the number of animals of each species and
the value per head or the weight and value
by pound.
(d) Appraisals of materials shall be
reported on forms furnished by Veterinary
Services. Reports of appraisals of
materials shall, when practicable, show the
number, size or quantity, unit price, and
total value of each kind of material
appraised.
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(21 U.8.C.: 112, 113, 115, 117, 120,
121, 134b) [28 FR 5935, June 13, 1963, as
amended at 35 FR 13981, Sept. 3, 1970; 36
FR 25217, Dec. 30, 1971)
4. 9C.F.R. Part 81.14 - Appraisal
Poultry, carcasses or parts thereof,
eggs, products, or articles required to be
destroyed in accordance with Section 81.12
shall be appraised by a Veterinary Services.
employee. The appraisal shall be the fair
market value at the time of Destruction as
determined by such employee.
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E. STATEMENT OF CASE
In 1983, Petitioner was a breeder of
poultry and had incorporated his flock with
that of one Henry K. Miller, an
internationally known and recognized
breeder of quality poultry. The
Petitioner, Wright, building on Miller’s
bloodline, started his own strain of
internationally recognized poultry.
Evidence at trial established that
Petitioner had an excellent reputation as a
breeder and had shipped birds around the
world. Petitioner’s business had increased
over the years, and the business’ was
incorporated as Fred. L. Wright, Inc., with
three divisions. Willow Hill Hatchery was
the chick hatching division, the day old
bird business was the selling operation for
day old chicks, and Willow Hill Poultry
Farms was the breeding operation which
produced hatching eggs.
—
In April of 1983, a contagious viral
disease know as avian influenza infected
poultry in Pennsylvania which resulted in
quarantine zones being established by the
Pennsylvania Department of Agriculture.
The avian flu outbreak could not be
contained, and on November 4, 1983, the
United States Department of Agriculture
became involved and established quarantine
zones prohibiting interstate movement of
poultry. The USDA and PDA acted in harmony
with one another in that the PDA
established intrastate quarantine zones
prohibiting movement of poultry within the
Commonwealth of Pennsylvania.
On November 9, 1983, the United States
Department of Agriculture declared an
"extraordinary emergency" and authorized
the Secretary of Agriculture to "seize,
quarantine and dispose of (infected)
poultry and other items
ow 8 «
In June of 1984, Petitioner’s flock
had been tested, and the test results
indicated that part of Petitioner’s flock
had tested sero positive for avian
influenza antibodies. Testing sero
positive for AI antibodies does not mean
that the flock was infected with AI. In
fact, at the time of the destruction of
Petitioner’s rare and exotic birds,
Respondent was testing sero positive birds
at the National Veterinary Services
Laboratories in Ames, Iowa. Despite
injecting the birds with steroids in a
controlled environment in order to break
down the immunity, the birds’ immunity
could not be shaken, and the sero positive
birds never developed AI. These results
were released shortly after the destruction
of Petitioner’s flock.
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Pursuant to the applicable
regulations, Petitioner’s flock was to be
destroyed, and Petitioner was to be
reimbursed for the fair market value of the
flock. Fair market value is "determined by
the meat, egg production, dairy or breeding
value .. ." of the animals destroyed. P]
C.F.R. Section 53.3(b)(1984). The United
States Department of Agriculture, in spite
of the regulation cited instructed its
expert to value the flock as "exhibition
birds". The exact statement signed by the
appraiser is as follows:
"We, the undersigned, being
licensed judges of the American
Poultry Association, have
appraised these exhibition birds
for their fair market value as
show birds. We have not
determined their value AS
breeders." (U.S. Court of
Appeals for the Federal Circuit,
Joint Appendix 35-36) (Emphasis
added)
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Petitioner also retained an expert,
and both experts were instructed by USDA to
value the flock as "exhibition birds", even
though they both knew they were valuing
breeding birds.
On July 23, 1984, the United States
Department of Agriculture ordered
Petitioner to destroy his flock by July 26,
1984. During this time period, the
Petitioner was negotiating with the United
States Department of Agriculture to develop
a plan to save the rare and exotic
bloodlines, and, in fact, professors from
Penn State University and the University of
Wisconsin developed plans to save
Petitioner’s flock from eradication. It
must be noted that the birds in question
were not mere meat or egglaying birds,
which could easily be valued, but rather
were rare and exotic breeds with a special
bloodline representing over 60 years of
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very strict and specialized breeding.
Respondent agreed to consider and review
these plans.
On July 31, 1984, Congressman Gus
Yatron, representing Petitioner’s
congressional district, met in Washington
with Asst. Secretary of Agriculture, Thomas
Kay, and acting Asst. Secretary, Karen
Darling. The USDA officials agreed to
review the plans and notify Congressman
Yatron of their decision. Shortly after
the meeting, late in the evening of July
31, 1984, Congressman Yatron was notified
that the birds would be destroyed.
The next morning, at approximately
5:00 a.m., Petitioner’s farm was literally
invaded by two Federal marshalls, four
state police officers and 75 Federal
employees, who destroyed Petitioner’s
flock, sheep, pigs and pet dogs, all in the
presence of Petitioner and his family.
There were 5,506 birds which were killed by
the Respondent. Congressman Yatron, in a
public statement, stated that the USDA’s
action was "very insensitive" and
“bureaucratic arrogance at its worse”.
(Joint Appendix 37, U.S. Court of Appeals
for the Federal Circuit)
After the destruction of Petitioner’s
flock, the Respondent offered $33,025.44.
Petitioner rejected this offer as
inadequate and submitted two claims to the
USDA for the fair market value of the flock
in the amount of $1,900,000.00, and one for
property damage occasioned by Respondent in
its cleaning and disinfecting in the amount
of $39,000.00; Petitioner’s claim for the
flock was rejected by USDA, Petitioner’s
claim for the property damage was never
considered or acted upon by USDA. After
Petitioner’s administrative remedies were
exhausted, Petitioner filed suit in the
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United States District Court for. the
Eastern District of Pennsylvania. The
District Court transferred the case for
lack of jurisdiction to the United States
Claims Court. (See Wright v. US Department
of Agriculture, No. 86, 3171, 1987 W.L.
13756, Eastern District PA, July 14, 1987.)
The Claims Court, in Wright v. U.S.,
14 Claims Court 819 (1988), dismissed
Petitioner’s constitutional claims of due
process, equal protection and taking claims
for lack of jurisdiction, but held that the
appraisal regulations at 9 C.F.R. Section
53.3(b) and 9 C.F.R. Section 81.14 (1984)
were to be considered in reviewing the
Secretary of Agriculture’s determination of
fair market value. The Claims Court held
that the statutes in question mandated that
the flock be evaluation on the basis of
“— wen
"meat, egg production . . . or breeding
value”. 9 C.F.R. Section 53.3, 81.14
(1984).
In light of the Claims Court’s
opinion, the Respondent instructed its
expert to re-appraise Petitioner’s flock as
breeders. The Claims Court found that the
re-appraisal was not done as breeders, and,
yet again, on 3/10/89, the Claims Court
ordered another remand for aé_— third
evaluation by the Secretary of Agriculture.
The USDA merely stuck with its original
appraisal on the third remand, but added
$1,340.00 from an appraisal conducted in
1988.
The trial of this case took place on
two issues: 1. Was the Secretary of
Agriculture’s determination of fair market
value arbitrary, capricious, an abuse of
discretion and/or contrary to law; and 2.
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Was the Respondent liable to Petitioner for
damage committed during the cleaning and
disinfectino of Petitioner’s premises?
The Claims Court found that’ the
Respondent had acted arbitrarily,
capriciously, abused its discretion, and
acted contrary to law after reviewing the
statutes and regulations in question, as
well as the Egg City cases and the facts of
this case. The only legal authority to
review the fair market value determination
in consideration of the indemnity
regulations in question was the Egg City
cases, and based upon applicable statutes,
regulations and the Egg City cases, as well
as the prior precedents set by Respondent,
the Claims Court ordered judgment in favor
of the Petitioner and against the
Respondent as follows:
| # $45,676.50, base replacement cost
for Petitioner’s flock;
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we $64,453.50, compensation for
transportation costs;
3. $409,656.82, lost profit for two
selling seasons;
4. $3,071.77, property damage to
Petitioner’s premises;
5. Total verdict, $522,858.59.
| The case was appealed to the Court of
Appeals for the Federal Circuit, who
reversed the trial court’s judgment in
part, and reduced’ the verdict from
$522,858.59 to $37,437.21. The key issue
in this case is the definition of fair
market value as applied to this case in
consideration of the law and prior
precedent of the Department of Agriculture.
Replacement cost, including lost profit as
a measure of fair market value was awarded
to the California poultry farmers in the
Egg City cases, and to deny the same
damages to the Pennsylvania farmers, as the
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U.S. Court of Appeals for the Federal
Circuit has done, is to apply the law in an
unjust, inequitable and discriminatory
fashion, and is in violation of the
statutes, regulations and precedent
established prior hereto. The decision of
the Court of Appeals for the Federal
Circuit is in direct conflict with the
opinion in the Egg City cases, and merely
substitutes its judgment for that of the
Claims Court in violation of its scope of
review, thereby resulting in an abuse of
discretion.
Federal jurisdiction is found, in the
first instance, in 28 U.S.C.A. Section
1491.
The Petitioner then filed a Petition
for Re-hearing and Suggestion for Re-
hearing, En Banc, with the United States
Court of Appeals for the Federal Circuit,
both of which were denied by said court.
“—
Thereafter, the Petitioner filed a timely
Petition for a Writ of Certiorari in the
Supreme Court of the United States.
The issues are now ripe for review by
your Honorable Supreme Court of the United
States.
“~_
F. ARGUMENT
1. The United States Court of Appeals
for the Federal Circuit has rendered a
decision in conflict with its own decision
in Julius Goldman’s Egg City v. U.S., 556
F.2d 1096 (U.S. Ct. of App. Fed. Cir.,
1977) and 697 F.2d 1051 (U.S. Ct. of App.
Fed. Cir., 1983), and committed an error of
law in interpreting the definition of fair
market value pursuant to the Federal
Indemnity Regulations of 21 U.S.C. Section
114, and 21 U.S.C. Section 134, as not
including replacement cost and a measure of
lost profits.
The definition of fair market value
used by the Court of Appeals is the
definition customarily used in Fifth
Amendment taking cases. However, the case
sub judice involves the indemnity statutes
and regulations and is not ae Fifth
Amendment taking case. The only other case
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to address fair market value in the factual
and legal context of this case are the Egg
City cases, which clearly held as follows,
in Egg City I, 566 F.2d 1098:
"The number of chickens was
multiplied by monetary
indemnities based on the
government’s view of the then-
current fair market value costs
of obtaining replacement birds of
various ages. Emphasis added.
In additi_n, in Egg City II, 697 F.2d
1051, at page 1055, 1056, the court held as
follows:
"Thus, each rancher was paid
a supplemental indemnity that was
based on a formula which included
the rancher’s theoretical lost
profits from his flock in the 26
weeks following destruction. The
Secretary had calculated that 26
weeks was necessary to raise a
chicken to profitable egg laying
age." (Emphasis added.)
"Rather, the supplemental
indemnity was an adjustment of
one element in the initial
determination of fair market
value, that is, lost profits from
egg production during the 26
weeks following destruction. The
supplemental indemnity was
intended only to add to the first
indemnity in order to pay full
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compensation for the destroyed
chickens. The earlier
determination of fair market
value resulting in the initial
indemnity included some
recognition of lost profits as an
element of fair market value,
i.e. the values represented by
the opportunity to make profits
from a_ chicken." (Emphasis
added. )
It is clear in reviewing Egg City, the
only fair market value indemnity case and
squarely on point with this case, that the
Court of Appeals for the Federal Circuit
permitted replacement cost and an element
of lost profits to form a part of fair
market value.
The Ct. of Appeals attempts to
distinguish Egg City by indicating in Egg
City "there was no actual market for
chickens of various ages in an egg ranchers
flock". (See slip opinion, page 3.) This
is clearlv a distinction without a
difference. The USDA in Egg City concluded
that during the period of time it took the
“2
chicks to reach egg laying age, the farmers
were without income and were entitled to
lost profits. That was because there was
no market for the chicks until they reached
egg laying age.
That logic is no different from the
instant case. Replacement birds or chicks
must reach sexual maturity before they can
begin breeding, and the testimony at trial
established that in most cases it takes at
least two years for such a bird to become a
proven breeder. During this period of
time, the breeder owner is without income.
Further, there was no evidence on which the
panel could make any type of assumption
that a market existed for these birds
otherwise. Thus, the distinction raised by
the panel is not a distinction at all and
results in unequal application of the law
and regulations as they apply in this case
and Egg City.
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The decision of the trial court
awarding replacement cost and lost profit
as an element of fair market value is fully
supported by the record and the Egg City
decision, and no abuse of discretion or
clearly erroneous finding of fact has been
made. The panel abused its’ review
authority in reversing the decision of the
trial court.
2. The United States Court of Appeals
for the Federal Circuit exceeded its scope
of judicial review and committed error in
reversing a finding of fact of the trial
court, where the record fully supports the
trial court’s finding and the U.S. Court of
Appeals failed to find that the trial
court’s finding was "clearly erronious".
The standard of review by the United
States Court of Appeals for the Federal
Circuit is a review of Claims Court
o 32.
decision for "errors of law" and "clearly
erroneous findings of fact". Cooper v.
U.S., 827 F.2d 762 (Fed. Cir. 1987).
In the case sub judice, the Ct. of
Appeals reversed a finding of fact of the
trial court and held that
“the record shows that USDA did
value the flock specifically as
breeders and did adjust its
original appraisal, based on the
value as exhibition birds
accordingly." (See footnote,
slip opinion, page 4.)
The above-quoted finding by the Court
of Appeals is in direct conflict with the
trial court’s finding on this point. On
this issue, the trial court found at 19
U.S. Cl. Ct., 598599:
"Because the USDA did not
evaluate Plaintiff’s flock on the
basis of their egg, meat or
breeder value, it was therefore
necessary for the court to
determine the factual question as
to what constituted ‘fair market
value’ for a poultry breeder in
Plaintiff's circumstances under
the applicable law.
Mr. Bortner’s testimony and
demeandor at trial left this
court in great doubt as_ to
._
whether he actually re-evaluated
Plaintiff’s entire flock or
merely appeased the Secretary by
raising the valve of a few birds.
His reappraisal letter to
the Secretary cast sonciderable
doubt on his re-evaluation. It
stated:
‘Having reviewed
the enclosed file on my
initial appraisal of
the Avian Flock of Mr.
Fred Wright, on July 7,
1984, I find very
little that I can
honestly re-appraise.
As stated on ail
the forms carrying my
signature, the "Value
was based on Market
Value of EXHIBITION
POGsaels + 0 «*s
I can not [sic] in
all sincerity, evaluate
any of these birds
as breeders.... I
personally do not think
anyone can do that.’
Letter from B.R. Bortner to USDA
(December 27, 1988) (Emphasis in
original). Mr. Bortner’s
teestimony at trial was
conflicting on this point,
although in the end he asserted
that he did indeed evaluate all
of the birds as breeders. The
inconsistency in his estimony on
two different days and his final
assertion that he did evaluate
the whole flock as_ breeders
combined with his inability to
explain the plain meaning of his
letter written at the time of his
- 35 -
re-appraisal, persuaded the court
to discount his testimony on this
issue. The court was simply not
convinced that Mr. Bortner ever
evaluated plaintiff’s entire
flock on proper statutory
grounds."
The Court of Appeals failed to find
that the trial court’s finding of fact,
that the USDA did not value the flock as
breeders, was "clearly erroneous”.
Further, a review of the record
unequivocably supports the trial court’s
finding that the USDA did not value the
birds as breeders in conformance with the
statute.
The record, at Joint Appendix 515-516
speaks for itself:
"The witness. I kept these
birds in my mind from the day
that we evaluated them. They
impressed me more than anything
else there. And, when the
government asked me to do this
re-evaluation, they were the
first ones that came to my mind.
And, I re-evaluated them then.
The court. As breeders or
as exhibition birds?
The witnegs. Here we go
again, as exhibition birds.
- 36 -
Mo ln
The court. OK. So you
never evaluated any of Mr.
Wright’s birds as breeder birds?
The witness. No."
The Court of Appeals simply
substituted its view of a finding of fact
over that of the trial court despite the
record supporting the trial court’s finding
and without finding that the trial court’s
finding of fact was "cliearly erroneous".
The Court of Appeals has committed a
grave abuse of discretion in exceeding its
scope of review.
3. As a result of the U.S. Court of
Appeals’ error in exceeding its scope of
judicial review and disturbing the trial
court’s findings, the U.S. Court of Appeals
misapprehended the legal issue and failed
to decide whether the Respondent acted
pursuant to 21 U.S.C. Section ll4a, 21
U.S.C. Section 134a, or both.
—:.
Had the Court of Appeals correctly
stayed within its scope of review, the
Court of Appeals would have affirmed the
finding of the trial court that the USDA
never appraised the Plaintiffs’ flock as
breeder birds. This finding is crucial
because it goes to the trial court’s
finding that the USDA acted arbitrarily,
capriciously, abused it discretion and
violated statutory standard. Assuming for
purposes of argument that the USDA did not
value Plaintiffs’ flock as breeders, as
found by the trial court and supported by
the record, the issue then becomes, was the
method used by the USDA arbitrary,
capricious and violative of statutory
standard. The section in question, 21 USC
Section 114a and its regulations, 9 CFR
53.3(b), clearly state as follows:
"The appraisal of animals
shall be based on the fair market
value and shall be determined by
—_—
the meat, egg production, dairy
or breeding value of such
animals." (Emphasis added. )
In this case, the USDA did not
appraise Plaintiffs’ flock by any of the
regulatory guidelines as set forth above.
Instead, and as found by the trial court
and fully supported by the record, USDA
appraised the Plaintiffs’ breeder flock as
“exhibition birds". Exhibition birds
appear nowhere in the law, and is not a
standard for valuation.
As a result of the Court of Appeals’
error in reversing the finding of fact that
the Plaintiffs’ flock was not appraised as
breeders, the Court of Appeals failed to
reach the pivotal question of the proper
guideline to be used in valuation and the
issue of the arbitrary, capricious and
beyond statutory standard actions of the
Respondent as found by the trial court.
— 2
4. The U.S. Court of Appeals exceeded
the scope of judicial review and abused its
authority by substituting its judgment on
the credibility of expert witnesses over
that of the trial court without finding
that the trial court abused its discretion,
and where the trial court’s findings are
fully supported by the record.
The issue of the credibility of an
expert witness is a matter left solely to
the sound discretion of the trier of fact
for it is he who observed the witnesses and
noted their demeanor at trial. Conflicting
expert testimony is also left to the trier
of fact, and the trial court’s decision
will not be reversed unless found to be
manifestly erroneous or an abuse of
discretion. (See Dickson v. International
Harvester Company [1985, CA 5 Miss.], 754
F.2d 573, Spesco, Inc. v. General Electric
Co. [1983, CA 7 Ind.) 719 F.2d 233, Lust v.
& £-<
Miata Se
Clark Equipment Co. [1986, CA 4 Va.] 792
F.2d 436, Breidor v. Sears, Roebuck & Co.
[1983, CA 3 Pa.] 722 F.2d 34, Rodriguez v.
Olin Corp. [1986 CA 5 La.] 780 F.2d 491.
In the instant case, the Ct. of
Appeals merely substituted its judgment on
' the credibility and believability of expert
witnesses over that of the trial court.
For example, the panel’s opinion, at slip
opinion, page 4, found:
"And Shollenberg, who served
as one of Plaintiffs’ experts and
who accompanied Bortner at the
original evaluation and testified
at trial that ‘at the time of
evaluation he could see no
greater value of the flock as
breeders than as exhibit birds’ .
; at footnote 4, "that the
adjustment was minor was no
reason to question the truth of
USDA’s stated basis for its final
appraisal, especially in light of
Shollenberg’s testimony."
The above view of the Ct. of Appeals
merely substitutes its judgment of which
experts to believe without discussing that
» £8 @
the trial court’s finding on the
believability of Plaintiffs’ experts is
supported by the record and was not an
abuse of discretion or manifestly
erroneous.
The trial court found at 19 Claims
Court 598, 599 as follows:
"Mr. Bortner’s testimony and
demeanor at trial left this court
in great doubt as to whether he
actually re-evaluated Plaintiffs’
entire flock or merely appeased
the Secretary by raising the
value of a few birds. ... The
inconsistency in his testimony on
two different days and his final
assertion that he did evaluate
the whole flock as_ breeders,
combined with his inability to
explain the plan meaning of his
letter written at the same time
of his re-appraisal, persuaded
the court to discount his
testimony on this issue. The
court was simply not convinced
that Mr. Bortner ever evaluated
Plaintiffs’ entire flock on
proper statutory grounds.
(Emphasis added. )
. . . At trial it became
clear that Mr. Shollenberg had
not valued Plaintiffs’ flock on
July 7, 1984, as breeders, nor
had he ever evaluated Plaintiffs’
flock for their breeder value.
In addition, Mr. Shollenberg
- 42 -
testified that at the time of
evaluation, he could see no
greater value in the flock as
breeders than as exhibition
birds. This testimony is
inconsistent with the testimonies
of other experts which the court
found more credible. The
testimonies of the other experts
who agreed on these latter points
were very convincing to_ the
court. Because Mr. Shollenberg’s
testimony was inconsistent with
other credible expert testimony,
the court discounted its
contradictory testimony.”
(Emphasis added. )
By comparison, the trial judge held in
regard to Plaintiffs’ two main expert
witnesses at 19 Claims Court 601 as
follows:
"Plaintiff provided the
expert opinion of two witnesses
, ° Mr. Hans Schippers, a
breeder from Holland, provided
testimony which was, in general,
most instructive and helpful to
Cee GOUEG . «
The testimony of Dr. Charles Waybeck,
Plaintiffs’ cther expert witness, was also
highly credible and instructive."
(Emphasis added. )
- 4 «
The panel merely substituted its
judgment on the credibility of the expert
witnesses over that of the triai court
without proper basis for doing so. The
record supports the trial court’s finding
of credibility on behalf of the Plaintiff’s
expert witnesses. As a result of exceeding
its scope of review, the panel has
misapprehended the facts of the case and
misapplied the law.
BS. The U.S. Court of Appeals
committed error and abused its discretion
by affirming the admission of a hearsay
document which formed the basis of a
witness’s testimony, where the witness had
no other independent knowledge of the facts
asserted therein.
Petitioner claimed that as a result of
the cleaning and disinfecting by the
Respondent, Petitioner had to replace two
_
incubators. The incubators were controlled
by mercury contact thermostats, which were
lost and destroyed during the cleaning and
disinfecting operation. The Plaintiff
testified that the thermostats in question
were no longer available, but that he did
find like kind incubators for sale, used,
at a cost of $35,000.00.
The government introduced Exhibit No.
60, Jt. App. Ct. of App. for the Fed.
Circ., 729, which allegedly showed that the
thermostats in question were available at a
cost of $562.50. The Petitioner objected
to this document and the testimony, which
were overruled by the court, for the reason
that the trial court and the Ct. of Appeals
both felt that the Respondent’s testimony
on this point was supported by independent
evidence on the record. At no time did the
trial court or the appellate court point
eo 46 «
out this alleged "independent evidence",
and the Petitioner contends that no such
evidence exists.
The Ct. of Appeals found at slip
opinion, page 5:
“Wright similarly failed to
meet his burden of showing that
replacement thermostats for the
two incubators were unavailable.
Longwith’s testimony
independently supports the
government’s claim that
replacement thermostats existed."
Not only was the document in question
in violation of Federal Rule 804(b)(5), but
a review of the record proves’ that
Longwith’s testimony does not independently
support the Respondent’s claim that
replacement thermostats existed. The
record shows that the only way Respondent
had any knowledge of any alleged
replacement thermostats was a result of
receiving the tainted evidence, Exhibit No.
60. At trial, Respondent presented no
+ 48 «
—_——
other testimony in any fashion whatsoever
which would support the claim that
Respondent independently possessed
knowledge that the alleged replacement
thermostats existed. No other writings or
memoranda of any nature were received or
submitted by Respondent in support of its
testimony and any other information was
clearly pure hearsay as a result of alleged
telephone conversations. This evidence
should not have been admitted at trial and
forms the only basis for the witness’s
knowledge. The record does not support
independent knowledge on behalf of
Respondent’s witness on this issue.
WHEREFORE, it is respectfully
requested that your Honorable Court grant
* £49 @
ee
the Petitioner’s Petition for a Writ of
Certiorari and hear the case.
Respectfully submitted
She Sr 4
C. Sandoe,
~~
H. APPENDIX
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
FREDERICK L. WRIGHT, et. al.: CIVIL ACTION
Vv. : NO. 86-3171
UNITED STATES DEPARTMENT
OF AGRICULTURE
MEMORANDUM AND ORDER
HUYETT, JR. JULY 14, 1987
Plaintiffs brought this action against
federal and state agencies and officials
for damages arising out of the destruction
of plaintiffs’ poultry and other property. |
In 1983, an outbreak of avian influenza
occurred in Pennsylvania, causing’ the
United States and Pennsylvania Departments
of Agriculture to establish a quarantine
zone in the Commonwealth. By February,
1984, the quarantine zone included
plaintiffs’ entire poultry operation.
The state defendants were dismissed by
order dated December 23, 1986.
According to plaintiff’s complaint, in
March, 1983, plaintiff Fred Wright
discovered two Avian Flu Task Force agents
on his premises. Plaintiff directed them
to leave and subsequently contacted the
Pennsylvania State Police, who filed
trespassing charges against them.
Ultimately, the trespassing charges were
dismissed.
Plaintiffs allege that in April, 1984,
their birds were tested for avian
influenza, and that in June, 1984, they
received a copy of the test results showing
that no avian influenza virus was present.
In July, 1984, defendants informed
plaintiffs that they planned to destroy
plaintiffs’ flock. Plaintiffs claim that
on August 1, 1984, defendants appeared on
plaintiffs’ premises without warning or
notice and slaughtered the flock.
Plaintiffs further allege that defendants
also caused incidental damage while
cleaning and disinfecting plaintiffs’
property following the depopulation of the
flock. Following the slaughter, plaintiffs
claim that defendants completed testing
plaintiffs’ flock and that the tests showed
that the poultry had developed an immunity
to the avian flu.
Plaintiffs allege that defendants
negligently misdiagnosed their flock and
needlessly destroyed their property.
Moreover, plaintiffs claim that they have
not received fair value for their flock
because defendants substantially
undervalued it, thus causing a "taking" of
plaintiffs’ property in violation of the
fifth amendment.
The federal defendants move to dismiss
the complaint, pursuant to Fed. R.Civ.P.
12(b)(1), on the ground that this court
lacks subject matter jurisdiction. For the
reasons stated below, I grant defendants
motion and transfer this case to the Unit
States Claims Court.
In ruling on a motion to dismiss,
must accept as true all well plead
factual allegations made in the complain
and must resolve all reasonable inference
to be drawn from those allegations in th
light most favorable to the plaintiffs
Robb v. City of Philadelphia, 733 F.2d 286
290 (3d Cir. 1984).
Defendants argue that plaintiffs
Claims are barred by the discretionar
function exception of the Federal Tor
Claims Act, 28 U.S.C. Section 2680(a). Thi
Third Circuit has recently held that thi
discretionary function exception exempt:
the United States from liability for claim
based on (1) discretionary planning leve
acts and omissions; (2) discretionar}
operational acts and omissions and (3
AVA
: ———
non-discretionary operational level acts
and omissions taken in furtherance of
discretionary planning level decisions.
Berkovitz v. United States, slip. op. at
16-17 (3d Cir. June 30, 1987). In
considering whether the discretionary
exception applies, a court must consider
whether "the acts of a Government employee
-- whatever his or her rank -- are of the
nature and quality that Congress intended
to shield from tort liability." United
States v. S.A. Empresa De Viacao Aerea Rio
Grandense (Varig Airlines), 467 U.S.C. 797,
813 (1984). The Court also stated that the
discretionary function exception "plainly
was intended to encompass the discretionary
acts of the Government acting in its role
as a regulator of the conduct or private
individuals." Id. at 813-14.
In this case, defendants’ authority to
act to prevent the spread of avian
influenza was derived from 21 U.S.C.
Sections 111-113, 114a-1, 115-117, 119-126,
130, 134a, 134b, 134d, 134e, and 134f, and
the regulations promulgated pursuant’ to
these statutes. See 9 C.F.R. Section 81.1
- 81.16 (1985) (repealed 50 Fed. Reg.
38969-70 (1985)). A review of these —
statues reveals that Congress plainly ©
intended to leave to the Secretary of
Agriculture’s discretion the decision of ©
how to proceed to control a potentially
contagious disease. In particular,
Congress provided for destruction of
poultry "whenever [the Secretary] deems it |
necessary", 28 U.S.C. Section 134a, or
"whenever the Secretary determines that an
extraordinary emergency exists". 28 U.S.C.
Section 134b. Thus, the decision of when
it is appropriate to destroy poultry is
within the Secretary’s discretion and the
discretionary function exception applies to
that decision. Moreover, in exercising
this authority, the Secretary is clearly
acting in his authority as a regulator of
conduct of private individuals.
Plaintiffs argue that at least their
claim as to the incidental damage to their
other property besides the destruction of
their poultry should proceed. However, the
alleged actions of defendants which caused
the incidental damage were operational acts
in furtherance of the planning level
discretionary decision to destroy
plaintiffs’ poultry, and thus the
discretionary function exception applies to
these acts as well. Berkovitz, slip. op.
at 16-17. Because the discretionary
function exception acts as a jurisdictional
bar, id. at 6, I must dismiss plaintiffs’
claim under the Federal Tort Claims Act for
lack of jurisdiction.
Plaintiffs also asserts jurisdiction
under 42 U.S.C. Section 1983. Plaintiffs
waived any claim against defendants in
their individual capacities. See Govt.’s
reply ex. l. Claims against the United
States and its agents may not be brought
under 42 U.S.C. Section 1983. Accardi v.
United States, 435 v.28 i239: |<2970).
Moreover, the federal defendants were
acting under color of federal, not state,
law. Even assuming such a claim could be
asserted, the complaint must be dismissed
because plaintiffs seek damages from the
federal treasury in excess of $10,090 and I
have no jurisdiction over this claim under
28 U.S.C. Sections 1346 (a)(2) and 1491.
Empire Kosher Poultry, Inc. v. Hollowell,
816 F.2d 907, 912 (3d Cir. 1987).
;
:
;
Finally, plaintiffs contend that
defendants’ actions constituted a "taking"
of their property without just compensation
in violation of the fifth amendment of the
Constitution because they were not given
the fair market value for their flock in
violation of 21 U.S.C. Section 134a(d). If
the defendants accomplished a regulatory
taking, then the Tucker Act provides a just
compensation remedy against the United
States. ted. aot 914 1.6. Plaintiffs
challenge the Secretary’s valuation of the
chickens, and seek damages in excess of
$10,000. Thus, exclusive jurisdiction of
this claim is vested with the United States
Court of Claims under 28 U.S.C. Sections
1346(a)92 and 1491.
In conclusion, I find that I lack
jurisdiction over this claim. Thus, I
shall transfer the claim against’ the
federal defendants to the United States
Court of Claims pursuant to 28 U.S.C.
Section 1631. An order follows.
/s/ Daniel H. Huyett
Daniel H. Huyett, 3rd,
Judge
—
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
FREDERICK L. WRIGHT, et. al.: CIVIL ACTION
Vv. >: NO. 86-3171
UNITED STATES DEPARTMENT
OF AGRICULTURE
ORDER
HUYETT, JR. JULY 14, 1987
Upon consideration of the federal
defendants’ motion to dismiss the complaint
pursuant to Fed.R.Civ.P. 12(b)(1),
plaintiffs’ response thereto and the
supplemental memoranda, and for the reasons
stated in the he attached memorandum, IT IS
ORDERED that:
1. the federal defendants’ motion to
dismiss for lack of subject matter
jurisdiction is GRANTED.
eS
Be The action against the federal
defendants shal? be transferred to the
United States Claims Court pursuant to 28
U.S.C. Section 1631.
IT IS SO ORDERED.
/s/ Daniel H. Huyett
— Daniel H. Huyett, 3rd, Judge
« $28 «
Frederick L. WRIGHT, III, et
al., Plaintiffs,
Vv.
The UNITED STATES, Defendant.
No. 520-87C.
United States Claims Court.
Feb. 26, 1990.
Owner of poultry flock which had been
destroyed because of disease brought action
to recover value of the flock and to
recover for damage to property during USDA
cleanup. The Claims Court, Moody R.
Tidwell, III, J., held that: (1) it was
improper to value poultry as pikihition
birds; (2) the "fair market value" to which
the owner was entitled was not limited to
its legal definition; and (3) owner was
entitled to recover base reparation costs,
transportation costs, and progeny value and
lost profits.
Ordered accordingly.
1. Administrative Law and Procedure
he. : oo
-744,763
Animals - 32
Review of decision of Secretary of |
Agriculture as to fair market value of |
poultry flock which the government has |
ordered destroyed is not de novo, aa |
claimant must prove that the administrative|
computation was arbitrary, capricious, =
abuse of discretion, or contrary to law. :
21 U.S.C.A. Section 134a.
2. Animals - 32
Because owner of poultry was}
voluntarily cooperating with quarantine of |
the Pennsylvania Department of Agriculture, |
action taken by the Secretary of}
Agriculture leading to destruction of the]
poultry which did not engender the;
cooperation of state or local jurisdiction
or the cooperation of owner of the poultry |
a. oe
that was to be destroyed was arbitrary, an
abuse of discretion, and contrary to law.
21 U.S.C.A. Sections 114a, 134a.
3. Animals - 37
Regulations and action by the
Secretary of Agriculture pursuant to
statute authorizing seizure and disposal of
diseased livestock cannot define the fair
market value of that livestock for purposes
of determining compensation to owner more
narrowly than language in regulations
enacted pursuant to the Secretary’s
authority to control and eradicate disease
through the cooperation of the states and
farmers’ associations. 21 U.S.C.A.
Sections ll4a, 134a.
4. Animals - 37
For purposes of determining
compensation to owner of poultry which is
destroyed because of disease, the term
"fair market value" is not limited to its
legal definition. 21 U.S.C.A. Sections
ll4a, 134a.
5. Animals - 37
It was improper to value poultry which
was destroyed because of disease on the
basis of its value as exhibition birds. 21
U.S.C.A. Sections ll4a, 134a.
6. Animals - 37
In determining value of poultry
destroyed because of disease, the "fair
market value’ was to be based on the base
reparation costs, transportation costs, and
progeny value and lost profits where the
owner was ae breeder of poultry. 21
U.S.C.A. Sections 1l4a, 134a.
7. Animals - 37
[BEST AVAIL
Owner of poultry which was destroyed
—ecause of disease was not entitled to
bcover progeny value for 27 years where
ere was no showing that the birds were
itreplaceable.
Animals - 37
Owner of poultry which was destroyed
Because of disease was entitled to recover
fr damage to his premises and equipment
cies by the United States Department of
, riculture in cleaning the premises
persuant to agreement under which the USDA
u dertook the cleaning because the owner
As financially unable to perform the
eanup himself.
Kenneth C. Sandoe, Myerstown, Pa., for
Paintiffs.
i] Richard P. Nockett, Washington, D.C.,
th whom was Acting Asst. Atty. Gen.
uart E. Schiffer, for defendant, Thomas
Bundy, of counsel.
ABLE COPY am
¥ See ye
OPINION
MOODY R. TIDWELL, III, Judge:
Plaintiff requests review of the
Secretary of Agriculture’s determination of §
fair market value of plaintiff’s poultry ©
flock following the flock’s destruction at |
the Secretary’s order. Plaintiff also ||
seeks redress for property damages or |
destroyed by defendant during the
subsequent cleaning and disinfecting of
plaintiff's premises.
FACTS
In 1983, plaintiff Frederick L. Wright
was a successful poultry breeder. He haa |
begun his own chicken farm following ;
college and over the years had expanded his
operation to include not only the normal 1
raising of chickens for their meat and egg
production but also breeding prize winning }
breeder chickens and a large variety of
other birds. During this time frame,
=) =
plaintiff had worked closely with Mr. henry
K. Miller, an internationally recognized
producer of quality, prize winning birds.
Plaintiff served as Mr. Miller’s clerk for
eight years. Ultimately, Mr Miller
entrusted plaintiff with the preservation
of the recognized "miller" bloodlines which
represented the culmination of Mr. Miller’s
lifetime of work. Using Mr. Miller’s
bloodiine, plaintiff later started his own
bloodline, colloquially known as the
Miller-wWright strain. |
By April, 1983, plaintiff's business
was successful and he had incorporated as
Fred L. Wright, Inc. with three operating
The creation and preservation of
recognized bloodlines is an involved
process requiring extensive bio-security,
genetic selection, isolation of bloodlines
during the breeding season, and selection
of the day-old chicks for their value as
breeders, exhibition or general sale. The
entire process of creating a new recognized
bloodline takes approximately twenty years
of breeding under these exacting
requirements.
—= =
ba
divisions: the Willow Hill Hatchery, the
hatching operation that provided the checks
for plaintiff's other operations; the Day
Old Bird Business, the selling operation
that scle the day old birds; and Willow
Hill Poultry Farms, the breeding operation
that produced hatching eggs for the Willow
Hill Hatchery (including also a dressing
plant, Willow Hill Poultry, dealing mainly
in game birds). Fred L. Wright, Inc. owned
two farms located in Berks County,
Pennsylvania. The home farm, site of
Willow Hill Poultry, Willow Hill Poultry
Farms, and the Day Old Bird Business, was
located approximately two-and-one-half
miles south of Bethel, Pennsylvania. The
airport farm, site of Willow Hill Hatchery
and a slaughterhouse, was located
approximately two-and-one-half miles
northwest of Bethel, Pennsylvania.
- 20 -
The evidence presented to the court
established that in 1982, one year before
the incidents surrounding this action
began, plaintiff had an excellent
reputation as a breeder. Plaintiff’s Day
Old bird Business shipped 250,000 to
300,000 birds a year to over 10,000
customers located on every continent save
Antarctica and Australia. Mr. Wright also
successfully exhibited his birds at fairs
and shows as a hobby but more importantly
as a marketing tool for the sale of his
breeder birds.
All this was threatened in April of
1983, however, when there occurred an
outbreak of a highly contagious viral
disease in Lancaster county, Pennsylvania
which the United States Department of
Agriculture (USDA) later identified as
"lethal avian influenza." The Pennsylvania
Department of Agriculture (PDA) acted first
— =
by quarantining premises in Lancaster
County where infected poultry were found.
The PDA’s action, unfortunately, was not
enough to contain the outbreak, and by late
October, 1983, the disease had continued to
spread within the quarantined areas killing
many poultry flocks.
On November 4, 1983, the USDA,
legitimately concerned that the continuing
spread of avian influenza would affect
poultry flocks even further afield,
quarantined portions of Berks, Dauphin,
Lancaster and Lebanon Counties in
Pennsylvania. The USDA’s quarantine
prohibited interstate movement of poultry
and certain related articles from the
outlined area. The PDA harmonized its
efforts with the USDA by enacting its own
even stricter regulations that disallowed
movement into, out of, or within the
- 22 -
quarantined area.” The initial USDA
quarantine enveloped plaintiff’s home farm
and had a serious impact on his business.”
On November 9, 1983, the Secretary of the
USDA declared that an "extraordinary
emergency" existed in Pennsylvania due to
the outbreak of the virus. Following this
declaration, the statute authorized the
Secretary to "seize, quarantine, and
dispose of [infected] poultry and other
items ... to ... carry out the provisions
OF :.460 HR. OBO.) 296-290; 64667: 2 C.F R.
Section 81.10 (1984). One v ek later, the |
USDA issued regulations expanding’ the
g-------------------
These harmonizing actions by PDA were
interwove with 21 U.S.C. Section 114a and
its accompanying regulation at 9 C.F.R.
Section 53.2 (1984). This court had
earlier found that the referenced statute
and its regulations must be read _ in
conjunction with a later, more narrow
authorizing statute at 21 U.S.C. cS.
Sections 134-134h and its regulations at 9
C.F.R. Sections 81.1-.15 (1984). Wright v.
United States, 14 Cl.Ct. 819 (1988).
3plaintiff’s airport farm initially escaped
the quarantine.
“—
earlier interim regulations to implement
their program to control, eradicate, and
prevent the further spread of avian
influenza.
By February of 1984, the quarantined
areas in Pennsylvania, which had originally
included only plaintiff’s home farm, had
spread to include plaintiff’s airport farm.
Accordingly, plaintiff’s business, which
had been severely affected by the earlier
quarantine, was now completely stopped.
Although plaintiff’s flock had
initially shown no signs of exposure, a
subsequent test in June, 1984 indicated
that at least part of plaintiff’s flock had
been exposed to the virus. Under the
regulations, this necessitated the
destruction of plaintiff’s entire flock
followed by reimbursement at the fair
market value, and the cleansing of his
facilities. In preparation for’ the
«= 26 -
destruction, USDA retained an outside
expert to appraise and determine "the fair
market value [of the flock] at the time of
destruction...." 9 C.F.R. Section 81.14
(1984). Fair market value was to be
“determined by the meat, egg production,
dairy or breeding value ..." of the animals
destroyed. 9 C.F.R. Section 53.3(b)
(1984). Despite these regulations, the
USDA instructed its expert to evaluate the
birds on their fair market value as
exhibition birds. An appraisal on this
basis was done on July 7, 1984 with
plaintiff and his own expert accompanying
defendant’s expert. The two expert
appraisers testified to the exhibition
value of plaintiff’s flock at the time of
its destruction. Although this
circumstance would appear to give their
respective evaluations great validity, the
fact is that there was no statutorily
« 28 =
designated basis to evaluate the flock as
exhibition birds. Both experts followed
the USDA ad hoc evaluation instructions
even though both experts knew that they
were not looking at exhibition birds and
that plaintiff's floch’'s value aes not as
exhibition birds but as breeder birds.
Sixteen days later, on July 23, 1984,
USDA ordered plaintiff to destroy his flock
by July 26, 1984. At trial it was evident
to the court that at the time plaintiff
received the USDA’s destruction order,
plaintiff believed that defendant was
willing to discuss the possibility of
saving that part of plaintiff’s flock which
had not been exposed to the virus. In
accordance with this belief, plaintiff did
not destroy his flock as ordered.
Defendant reacted to plaintiff’s failure to
immediately comply with the destruction
order by obtaining a court order to destroy
i< 26 =
plaintiff’s flock. On August 1, 1984,
defendant entered upon plaintiff’s farms
with two federal marshalls. four state
police officers and seventy-five other
federal employees who destroyed plaintiff’s
flock, sheep, pigs and pet dogs. In
compensation for its destruction of Mr.
Wright’s flock, defendant offered
$33,025.44 by letter dated August 14, 1984.
Plaintiff rejected the offer as inadequate.
Pursuant to regulation, the USDA also
required plaintiff to clean and disinfect
his premises before the quarantines placed
on his properties could be lifted.
Plaintiff, however, could not bear the cost
to clean and disinfect his farms because he
had been out of business from the preceding
November and missed his biggest selling
season, from May to the end of July. The
PDA attempted to help plaintiff clean his
premises in September of 1984, but this
- 27 -
attempt was unsuccessful due to a dispute
about the manner in which the clean-up was
to be accomplished. consequently, on
October 4, 1984, USDA issued a formal order
to plaintiff to clean and disinfect his
premises. Regardless of the USDA’s order,
plaintiff’s financial situation made it
impossible for him to comply. On March 28,
1985, plaintiff and the USDA negotiated an
agreement whereby defendant would clean and
Gisinfect plaintiff’s premises at
defendant’s expense. The agreement stated
that the on-site director of the government
clean-up team would be responsible for
deciding which items could be cleaned and
disinfected and which would have to be
destroyed. The government clean-up
operation began on March 29, 1985 and was
completed on April 20, 1985. The
quarantines on plaintiff’s premises were
finally lifted on May 21, 1985.
£6 «
On June 5, 1985, plaintiff submitted
separate claims to the USDA pursuant to two
separated but related sections of the
governing regulations. Plaintiff sought
approximately $1.9 million in damages for
the destruction of his flock and
approximately $39,000.00 for property
damages caused by the USDA’s cleaning
operation. Plaintiff’s $1.9 million claim
was rejected by letter on September 27,
1985. His property claim was never
considered nor acted upon by the USDA.
After exhausting his administrative
remedies, plaintiff in June of 1986 filed
suit in the United States District Court
for the Eastern District of Pennsylvania
seeking compensation for the destruction of
his flock and for property damage done
during the government’s clean-up operation.
Because the district court lacked
jurisdiction under 28 U.S.C. Section 145l,
“a 20 «
it transferred the case to the United
States Claims Court. Wright v. United
States Dept. of Agric., No. 86-3171, 1987
WL 13756 (E.D. Pa. July 14, 1987). In
Wright v. United States, 14 Cl.Ct. 819, 824
(1988), this court dismissed plaintiff’s
constitutionally-based due process, equal
protection, and takings claims for lack of
jurisdiction. At that time, this court
concluded that the appraisal regulations at
9 C.F.R. Section 53.3(b) and 9 C.F.R.
Section 81.14 (1984) were to be considered
together in reviewing the Secretary of
Agriculture’s determination of the fair
market value of plaintiff’s flock. Read
together, these statutes mandated that
plaintiff’s flock be evaluated on the basis
of the flock’s "fair market value ...
determined by meat, egg production ... or
- 30 -
breeding value ... at the time of its
destruction. 9 C.F.R. Sections 53.3, 81.14
(1984).
In December of 1988, defendant
instructed its expert to re-appraise
plaintiff’s flock on proper. statutory
grounds, i.e., on the basis of the flock’s
breeder value. Defendant’s expert complied
as well as he could, although he expressed
the opinion that it was impossible to
accurately re-evaluate the flock on
different grounds so many years later.
Defendant’s expert did, however, provide a
figure which he testified at trial
represented re-appraisal of plaintiff’s
entire flock as breeder birds.
On March 10, 1989, this court, mindful
of the December, 1988 re-evaluation,
remanded the evaluation again to the
Secretary for yet a third evaluation.
Because expert testimony during discovery
~~:
1
had produced estimates ranging from
$33,025.44 to $110,130.00, the remand order
directed the Secretary to consider the
opinions of all expert testimony provided
to the government through discovery, as
well as any other expert or experts the
Secretary wished to consult. On April 14,
1989, the Secretary issued its’ third
evaluation. USDA stated that it had
considered all the evaluations produced
through discovery as well as the evaluation
of another expert retained for purposes of
complying with this court’s order. The
third evaluation found that the
government’s original evaluation was the
most fair since that expert had actually
geen the flock closest to the time of its
destruction. To that expert’s original
figure of $33,025.44, the Secretary added
$1,340.00 which represented that expert’s
ws oe
December, 1988 re-evaluation of plaintiff’s
flock allegedly based on proper statutory
grounds.
The parties continued to trial on the
following issues: 1) whether the Secretary
of Agriculture’s evaluation of plaintiff’s
flock was arbitrary, capricious, an abuse
of discretion or contrary to law; and 2)
whether defendant was liable under the
statute to compensate plaintiff for damages
done to plaintiff’s property during the
cleaning and disinfecting operation.
DISCUSSION
[1] Although this court can exercise
judicial review of the Secretary of
Agriculture’s decision as to the faiz
market value of plaintiff’s flock, that
judicial review is not de novo. Therefore,
plaintiff must prove that "the
administrative computation, as applied to
it, was arbitrary, capricious, an abuse of
4 28 «
discretion, or contrary to law." Julius
Goldman’s Egg City v. United States, 556
F.2d 1096, 1099, 214 Ct.Cl. 345 (1977),
cert. denied, 464 U.S.C. 814, 104 S.Ct. 68,
78 L.Ed.2d 83 (1983) (cited as Egg City I).
{Ijin a case like this, the
Department [of Agriculture] does
not have discretion whether or
not to pay nor can it decide for
itself that something other than
“fair market value" shall be
awarded....{T]he measure of fair
market value shall be 2
as
determined by the Secretary."
Those words...go to show
that...the court cannot
substitute its own discretion for
properly exercised administrative
discretion. But the language
Goes not carry the further burden
of making the Secretary’s
i
exercise of his discretion
conclusive even though he abuses
it, acts arbitrarily or
capriciously, or fails to follow
the statutory standard by
refusing to grant a reasonable
fair market value.
Id. (quoting 21 U.S.C. Section 134a(d)).
I. Evaluation of Plaintiff’s Flock
Defendant argued that the Secretary of
Agriculture acted entirely within the
authority provided by 21 U.S.C. Section
134a. Defendant proposed that after
declaring that an emergency existed, the
Secretary properly exercised his authority
to promulgate regulations to enable the
USDA to control and eradicate avian
influenza. See 9 C.F.R. Sections 81.1-.15
(1984).
- 35 -
The initial disputed issue that arose
was whether 9 C.F.R. Sections 81.1-.15
represented the controlling regulations for
the purposes of this action. This court
answered that question in Wright v. United
States, 14 Cl.Ct. 819, 823-24 (1988). This
court held that both 21 U.S.C. Section 134a
and 9 C.F.R. Sections 81.1-.15 should be
read in conjunction with 21 U.S.C. Section
ll4a and 9 C.F.R. Sections 53.1-.10.
Wright, 14 Cl.Ct. at 823-24. In that
earlier decision this court focused
primarily on whether there were grounds for
granting summary judgment.
Defendant argued that the legislative
history of section 134a supported its
contention that the use of the term "fair
market value" in the he statute meant that
Congress had intended the specific, settled
and well-known legal meaning of _ that
phrase. Further, defendant contended that
=
case law supported its contention that
section 134a was distinct from section ll4a
and, therefore, fair market value had a
distinct meaning under section 134a without
regard to other laws.
A. The Proper Statutory Basis
The basic form of compensation to
owners of livestock destroyed at government
order, contained in 21 U.S.C. Section 114,
was first enacted into law on May 29, 1884
as chapter 60 section 3, 23 Stat. 32
(1884). Section 1l4a, which provides for
the payment of c.iaims to the owners of
poultry destroyed by the government through
a government effort to eradicate
communicable diseases, was first added to
this law on September 21, 1944. 21 U.S.C.
Section ll4a (1982). Later, because
"le)]xhisting basis authority (act of May
29, 1884, as amended) provides for payment
of claims for the destruction of animals
—
al
and poultry affected by or exposed to
diseases, but makes no provision of payment
for the destruction of material affected by
or exposed to such diseases," Congress
expanded section 114a on August 3, 1956 to
include payment for those materials
destroyed pursuant to a government mandated
eradication program. H.Rept. No. 2732,
84th Cong., 2d sess (1956). Gaps that
remained in the statutory scheme were
addressed by Congress in 1962 when Congress
enacted 21 U.S.C. Section 134, to wit:
The general effect and
purpose of this bill is twofoid:
(1) To extend to all communicable
diseases of livestock and
poultry, authority of the
Secretary to deal with emergency
situations arising from outbreaks
of such diseases, such as he now
has with respect to specific
= =
diseases in numerous’ separate
laws; and (2) to charge the
Secretary of Agriculture with the
general duty and responsibility
of
preventing the entry of
dissemination of communicable
diseases of livestock and
poultry, so that he may take
action before an emergency
arises.
H.Rept.
(1962).
that:
No. 1518, 87th Cong., 2nd _ sess
The Senate report likewise states
The bill ... is designed to close
a number of gaps which have shown
up in the animal quarantine laws
and
to clarify authority for
certain actions under such laws.
Those laws have been enacted from
time to time to meet particular
Situations. They are applicable
=—s
to specific animals, diseases, or
circumstances, and fail to cover,
or provide different authority
with respect to, other animals,
diseases and circumstances where
there is a need for uniform,
broad authority. The bill is
designed to provide such
authority for all cases of like
need....
The bill would increase’ the
Secretary’s seizure authority;
clarify his authority to restrict
imports; increase authority for
inspection and for sanitary
regulations, and provide
injunction authority. The
purpose of the bill is to provide
adequate safeguards for the
“7 =
protection from disease of our
domestic livestock and poultry
industry.
S.Rept. No. 582, 87th Congress, list sess
(1961).
The language of sction 134a is clear
that "the statute’s purpose is to give the
Secretary continuing authority for disease
control and eradication ... allowing him to
take swift action to eliminate the inherent
dangers of contagious livestock diseases."
Egg City I, 556 F.2d at 1100. Defendant,
therefore, argued too broadly that this
section provided the only statutory
authority under which the Secretary acted
in this emergency. Defendant pointed to no
language in the statute itself or in the
legislative history, nor can this court
find any such language, supporting
defendant’s assertion. In addition, this
court finds that even though the
wu Ot «
Secretary’s authority under section 134a is
extraordinary, congressional intent is
clear that "the purpose of the indemnity is
-..- to engender owner cooperation with the
Secretary’s efforts." Id. Accordingly,
section 134a does not allow the Secretary
to act in those states where "adequate
measures are ... being taken by the State
or other jurisdiction." 21 U.S.C. Section
134a(b) (1982). Furthermore, whatever the
circumstances, the Secretary is required to
“notify the appropriate official of the
State or other jurisdiction before any
action is taken in any such State or other
jurisdiction pursuant to this subsection."
Id. The requirements, therefore, relate
the Secretary’s actions pursuant to section
134a back to the clear congressional
purpose of engendering cooperation as
stated in section 1l4a.
—_
{2) The evidence presented to the
court clearly showed that the beginning
stages oi this emergency were accomplished
under 21 U.S.C. Section 1l4a, not 21 U.S.C.
Section 134a. The Secretary’s authority
and power under title 21 U.S.C. Section
134a did not become effective until the
November 9, 1983 declaration that an
emergency existed and that the state o
Pennsylvania was unable to meet the threat.
By November 9, 1983 when the Secretary was
first able to invoke his extraordinary
powers enumerated in section 134a,
plaintiff was already voluntarily
cooperating under the PDA’s quarantine and
only after that November declaration could
the USDA and PDA roles reverse. Indeed,
the USDA’s first action was to promulgate
regulations in harmony with already
existing PDA quarantines. It would
therefore be unreasonable as well as
—
contrary to discernable congressional
intent if the voluntary cooperation with
government authority begun under one
statute (section 114a) were to be totally
ignored and disregarded by the Secretary of
Agriculture’s subsequent actions under a.
later statute (section 134a). Therefore,
we hold that the actions taken by the
Secretary in this case which did not
engender the cooperation of the state or
local jurisdiction involved or the
cooperation of the owners of the poultry
that was to be destroyed were contrary to
congressional intent expressed in the
narrower, applicable section 114a;
therefore, these actions were arbitrary, an
abuse of discretion, and contrary to law.
[3] Defendant also argued that "fair
market value", legally defined as_ the
amount a willing buyer would pay a willing
seller, was limited by Congress’ later use
i
Ex Fe > eee ee ey
of those words in enacting the Secretary’s
broader powers under section 134a.
However, upon examination, defendant’s
argument fails for three reasons. First,
reading the statutes and regulations as
defendant argues would be contrary to
congressional intent as arbitrarily
limiting the compensation due plaintiff to
the legal definition of fair market value
might not induce the cooperation of farmers
with the government mandated destructions.
The facts of this case clearly show that
plaintiff would never have cooperated with
the USDA at all in its attempts’ to
eradicate avian influenza, much less allow
the USDA to destroy his’ flock, had
plaintiff known the apparently nominal
amount of compensation he would eventually
be offered in compensation for the
destruction of his flock. Implicit in
plaintiff’s grudging cooperation with the
a £6 =
USDA’s efforts was his belief that he would
be treated fairly by the government and
receive what he considered adequate
compensation for the damages done pursuant
to the USDA’s’7 actions. Second, the
language of the statute itself does not
limit the compensation to the legal term of
art of fair market value. See Johns-
Manville Corp. v. united States, 855 F.2d
1556, 1559 (Fed.Cir.1988), cert. denied,
0.3.C. -—_».,5° 3100 ~B.Cee 33968): : 263
L.Ed.2d 811 (1989); Wright, 14 Cl.Ct. at
822-23. Third, as pointed out in this
court’s earlier order, the regulations of
section ll4a (enacted in 1956) determine
fair market value more narrowly than the
later regulations of section 134a (enacted
in 1962) by specifically defining the basis
for a fair market value determination.
4ohis does not suggest that the legal
definition of fair market value can never
be sufficient under section 53.3(b).
66 -
Therefore, the general language of the
regulations of section 134a can not
properly be interpreted as defining fair
market value more narrowly than the
specific language in the regulations of
section 1l4a.
[4] Defendant’s last argument was
that the legislative history does not
foreclose USDA’s interpretation of the
statute and that USDA’s interpretation is
reasonable and therefore must be upheld by
the court. See Chula Vista City School
Dist. v. Bennett, 824 F.2d 1573, 1582
(Fed.Cir.1987), cert. denied, 484 U.S.C.
1042, 108 S.Ct. 774, 98 L.Ed.2d 861 (1988).
We hold, however, that the clear intent as
shown by the congressional history does not
support defendant’s argument. This holding
is consistent with other courts’
determinations that the purpose of the
indemnity regulation was "to encourage
—. =
owners of infected or exposed poultry to
destroy their birds, thereby reducing the
spread of the disease." Empire Kosher
Poultry, Inc. v. Hallowell, 816 F.2d 907,
914 (3rd Cir.1987); see also Egg City I,
556 F.2d at 1100. In addition, this
court’s determination is consistent... with
the Supreme Court’s conclusion that fair
market value, as limited to its legal
definition, may not always be appropriate.
The Court therefore has employed
the concept of fair market value
to determine the condemnee’s
loss. Under this standard, the
owner is entitled to receive
“what a willing buyer would pay
in cash to a willing seller" at
the time of the taking. United
States v. Miller, [317 U.S.C.
369, 374, 63 S.Ct. 276, 280, 87
L.Ed. 336 (1943).]...{T])he
= 7
concept of fair market value has
been chosen to’ strike a fair
“balance between the _ public’s
need and the claimant’s ioss"
upon condemnation of property for
a public purpose. United States
v. Toronto, Hamilton & Buffalo
Nav. Co., 338 U.S.C. 396, 402 [70
$.Ct. 217, 221, 94 L.Ed. 195)
(1949)....
But while the indemnity
principle must yield to some
extent before the need for a
practical general rule, this
Court has refused to designate
market value as the sole measure
of just compensation. For there
are situations where this
standard is inappropriate.
—_— =
United States v. 564.54 Acres of Land, 441
U.S.C. 506, 511-12, 99 S.Ct. 1854, 1857, 60
L.Ed.2d 435 (1970)(supplemental citations
omitted).
However, the full thrust of
defendant’s argument cannot be disposed of
this easily. Defendant further argues
that, since this is USDA’s determination of
its own regulation, great deference must be
afforded that determination. Chevron
U.S.A. Vv. Natural Resources Defense
Council, 467 U.S.C. 837, 843-44, 104 S.Ct.
2778, 2782, 81 L.Ed.2d 694 (1984). As a
general proposition, defendant’s assertion
holds true. However, where the agency
determination is contrary to clear
congressional intent, the “judiciary is [to
be] the final authority...." Id. at 843 n.
oS, £66. 6.06. :.26-27e8 8. 9. Moreover,
defendant’s argument is flawed because the
Department of Agriculture has not limited
= 2
i
i
j
its own use of the two statutes in
combination to this "legal definition" of
fair market value. See Julius Goldman’s
Egg City v. United States, 697 F.2d 1051
(Fed.Cir.), cert. denied, 464 U.S.C. 814,
104 S.Ct. 68, 78 L.Ed.2d 83 (1983) (cited
as Egg City II).>
This court finds,
therefore, that the combination of: 1) the
congressional intent to encourage those
injured by government destruction to assist
the government in its greater effort to
eradicate the disease by fair compensation,
2) the consistent findings of courts that
fair market value, notwithstanding the fact
that it has a settled legal meaning, cannot
mean a value that fails to provide adequate
compensation, and 3) the Secretary of
Agriculture’s earlier actions under these
In Egg City II, the Court of Appeals for
the Federal Circuit held that it was proper
for the Secretary to even include a measure
of profits in determining a fair market
value compensation. Egg City II, 697 F.2d
at 1055.
=
same statutes, described in Egg City I and
Egg City II, makes it impossible for this
court to find the Secretary’s actions in
the present case reasonable. Therefore,
dGefendant’s argument fails and the court
need not and will not give deference to the
agency’s determination of fair market value
in the present action.
B. The Determination of Fair Market Value
[5] The next question, this court
must answer is whether the regulations at 9
C.F.R. Sections 53.3 and 81.14 (1984),
applicable to this case, were properly
administered by the Secretary of
Agriculture. The facts presented at trial
unequivocally showed that both defendant’s
ang plaintiff’s on-site experts were
instructed by an unknown USDA official to
evaluate plaintiff’s flock not on any
statutorily recognized basis but as
exhibition birds. The applicable
« 08 «
regulations would have required fair market
value to be determined “at the time of
destruction" of the flock, 9 C.F.R. Section
81.14 (1984), and "by the meat, egg
production ... or breeding value" of the
flock. 9 C.F.R. Section 53.3(b) (1984).
Nowhere in the statutes, sections 114a or
134a, nor the implementing regulations, 9
C.F.R. Sections 53.3 and 81.14, were there
any instructions for evaluating poultry on
the basis of its exhibition value.
therefore, the Secretary of Agriculture did
not properly administer the applicable
regulations in this case.
Furthermore, the Secretary’s actions
were contrary to congressional intent. As
this analysis has shown the legislative
purpose of section 134a was to give the
Secretary of Agriculture extraordinary
powers to act when necessary to protect the
poultry industry. In order to encourage
- 53 -
tT
a
breeders who would be injured by the
government’s emergency actions to assist
the government in its objectives to restore
the industry to its former place as quickly
as possible, the Secretary was mandated by
Congress to compensate the farmers for
their loss. If the compensation offered by
the Secretary were inadequate, however, the
Secretary would obviously face opposition
to his actions, there would be unwarranted
delay in restoring the the breeders and the
industry to its former place, and
congressional intent would not be served.
[6] Finally, the statutory language
quoted above did not, as defendant
asserted, limit compensation to a ceiling
price equal to the generally acceptable
legal term of art "fair market value."
Instead it set that value as a minimum
basis for compensation. Although defendant
was correct in stating that the concept of
wt B84 «
fair market value was one well recognized
in law and that the use of that term in the
statute suggested that Congress meant the
legal term of art, defendant is not saved
from following the entirety of the
statute’s mandates which include section
114a where the specific grounds’ for
evaluation are enumerated. Because the
USDA did not evaluate plaintiff’s flock on
the basis of their egg, meat or breeder
value, it was therefore necessary for the
court to determine the factual question as
to what constituted "fair market value" for
a poultry breeder in plaintiff’s
circumstances under the applicable law.
There was much evidence presented at trial
on this issue by expert testimony,
applicable court precedent and the
Secretary’s prior actions. This evidence
focused on three elements to be considered
in determining "fair market value" for
—
plaintiff’s birds: 1) the base reparation
cost; 2) transportation costs; and 3)
progeny value and lost profits.
1. Base Reparation Cost
A range of values for plaintiff’s
flock, from a low of $33,025.44 to a high
of $113,631.75, was provided to this court
by a total of six expert witnesses, two for |
plaintiff and four for defendant. The
lower values, falling within a range of
$33,025.44 to $45,329.50, were provided by
defendant’s experts. Testimony suggested
this range of values might be consistent in
that it represented reasonably differing
values that individual judges might provide
when looking at the same birds.
Plaintiff’s experts provided valuations of
$110,130.00 and $113,631.75. The
discrepancy between the two ranges was due
to plaintiff's experts including
transportation costs as part of their
=>
valuation while defendant’s experts limited
their valuations to the price a willing
buyer would pay a willing seller, or the
legal term of art definition of fair market
value. It has already been shown that
under the facts of this case, this legal —
term of art limitation was faulty. It
remains for the court, however, to
determine the proper base reparation cost
of plaintiff's flock. Transportation costs
have two components; 1) the cost of
finding a suitable replacement bird,
including reasonable transportation costs
necessary to travel to and from a
particular location to see the bird for
purchase; and 2) the actual cost of
shipping the bird from the seller to the
buyer. Testimony showed that this last
component can be substantial.
a 2
The defense experts’ re-evaluations of
plaintiff's flock on proper’ statutory
grounds, i.e., as breeder birds, following
this court’s remand order of March 10,
1988, produced greater harmony in their
final figures. Mr. Bortner, defendant’s
original appraiser, re-evaluated
plaintiff's flock and increased the value
of his earlier evaluation to $34,365.44.
The Secretary determined that because Mr.
Bortner had actually seen the flock just
before its destruction, and neither
plaintiff’s experts or the Secretary’s
remand experts had seen plaintiff's flock
for several years if at all, Mr. Bortner’s
testimony was the most credible in arriving
at a fair market value of plaintiff’s
flock. While the Secretary’s conclusion
appears reasonable, Mr. Bortner’s testimony
and demeanor at trial left this court in
great doubt as to whether he actually re-
—
i
.
;
5
Ra cea Sl!
evaluated plaintiff’s entire flock or
merely appeased the Secretary by raising
the value of a few birds. His reappraisal
letter to the Secretary cast considerable
doubt on his re-evaluation. It stated:
Having reviewed the enclosed
file on my initial appraisal of
the Avian Flock of Mr. Fred
Wright, on July 7, 1984, I find
very little that I can honestly
re-appraise.
As stated on all the forms
carrying my signature, the "Value
was based on Market Value of
EXHIBITION Poultry...."
I can not [sic] in all
sincerity evaluate any of these
birds ... as _ breeders.... I
personally do not think anyone
can do that.
=— =
Letter from B.R. Bortner to USDA (December
27, 1988) (emphasis in original). Mr.
Bortner’s testimony at trial was
conflicting on this point, although in the
end he asserted that he did indeed evaluate
all of the birds as_ breeders. The
inconsistency in his testimony on two
different days and his final assertion that
he did evaluate the whole flock as breeders
combined with his inability to explain the
plain meaning of his letter written at the
time of his re-appraisal, persuaded the
court to discount his testimony on this
issue. The court was simply not convinced
that Mr. Bortner ever evaluated plaintiff’s
entire flock on proper statutory grounds.
Two other defense experts, Mr. Arthur
Schallenberg and Mr. John Wunderlich,
agreed with Mr. Bortner’s evaluation. Mr.
Schallenberg served as plaintiff’s expert
at the original evaluation of the flock.
<< 2
26 LE ORL, ADE LE LED ION LE Ni OE IIE OE ee
Si
“4
4
a
While this would appear to lend credibility
to Mr. Schallenberg’s evaluation, at trial
it became clear that Mr. Schallenberg had
not valued plaintiff’s flock on July 7,
1984 as breeders nor had he ever evaluated
plaintiff’s flock for their breeder value.
In addition, Mr. Schallenberg testified
that at the time of evaluation he could see
no greater value in the flock as breeders
than as exhibition birds. This testimony
was inconsistent with the testimonies of
other experts which the court found more
6
credible. The testimonies of the other
g-------------------
Defendant also _ argued, and testimony
provided, that in the industry exhibition
birds and breeder birds can mean the same
thing as exhibition birds represent the
best product of a breeder’s output and may
be used, after exhibition, to breed more
poultry. The court was persuaded, however,
that this was not true in plaintiff’s
situation as expert testimony convincingly
demonstrated that an evaluation of
plaintiff’s flock as breeder birds would be
substantially higher than an evaluation of
plaintiff’s flock as exhibition birds.
Oftentimes non-exhibition birds produce the
best exhibition birds and, conversely,
exhibition birds do not necessarily produce
ot G8. «
experts who agreed on these latter points
were very convincing to the court. Because
Mr. Schallenberg’s testimony was
inconsistent with other credible expert
testimony, the court discounted his
contradictory testimony. Mr. Wunderlich,
who did not testify at trial, was retained
by the Secretary after the court had
remanded the valuation decision to the
Secretary. Mr. Wunderlich deferred heavily
to the opinions of Mr. Bortner and Mr.
Schallenberg in his written evaluation of
plaintiff's flock because those experts had
seen plaintiff’s flock within a month of
its destruction. Like defendant’s other
witnesses, there was little evidence, if
any, showing that Mr. Wunderlich ever
evaluated plaintiff’s flock independently
on their value as breeders. Also, because
of the lack of credibility of Mr. Bortner’s
exhibition birds.
sy
and Mr. Schallenberg’s evaluations which
served sa the basis for Mr. Wunderlich’s
evaluation, the court cannot accept Mr.
Wunderlich’s opinion as a basis for a fair
market valuation.
The only defense expert who testified
unequivocally that his evaluation was done
on the basis of plaintiff’s flock being
breeders was Dr. John L. Skinner. Dr.
Skinner was retained by the Secretary as an
expert pursuant to this court’s March 10,
1989 remand order. Dr. Skinner did not
testify at trial. The quality of his
written testimony, however, was quite apart
from defendant’s other experts.
Defendant’s other experts’ testimonies were
very confused, leaving the court wondering
whether a fair evaluation on the proper
basis was or could have been done at any
time. The testimony of Dr. Skinner, on the
other hand, provided the court with
—_—
valuation figures from which an accurate
assessment could be made. Dr. Skinner
displayed independent understanding of the
breeder industry and the condition of
plaintiff’s birds at the time of their
destruction. His testimony was clear and
unequivocally showed that he _ evaluated
plaintiff’s flock on the basis of their
breeder value and determined that the fair
market value of Mr. Wright’s flock at the
time of its destruction was $45,676.50.
Because of his forthrightness and
expertise, the court accepted in part Dr.
Skinner’s evaluation as a basis’ for
determining fair market value. His
evaluation, which did not include
transportation costs that he testified
should be included in a final fair market
valuation, was useful and instructive to
the court. See Letter from Dr. John L.
Skinner to USDA (March 23, 1989).
oe
2. Transportation Costs
Defendant argued most strenuously that
the law does not require compensation of
transportation costs incidental to a
breeder’s repopulation of his flock. The
court is convinced however, that had the
Secretary properly evaluated plaintiff’s
flock in July, 1984 as breeder birds, then
transportation costs would have suggested
themselves as a necessary element of the
fair market value compensation due
plaintiff. The majority of expert
witnesses at trial, both for defendant and
for plaintiff, agreed that they expected
transportation costs to be paid in these
circumstances. Mr. Bortner, defendant’s
primary expert, said: "I would expect the
government to pay it all." or. et 306.
Dr. Skinner, another defense expert whom
the defense found highly credible, stated
in his letter that one of the factors to be
considered above and beyond the cost of
similar replacements was the
"[t]ransportation of those replacements to
Mr. Wright’s premises." Letter from Dr.
John L. Skinner to USDA (March 23, 1989).
Plaintiff’s experts included
transportation costs as necessary costs in
their valuations of plaintiff’s flock while
defendant’s experts did not. The person
apparently most responsible for defendant’s
confusion on this issue was Dr. Lonnie
King, the Deputy Administrator for
Veterinarian Services for the Department of
Agriculture in charge of the avian
influenza eradication program. This
confusion was evidenced in the following
conversation between the court and Dr.
King.
THE COURT: During your
testimony, you actuated [sic]
fair market value as_ being
—
replacement costs. I believe
that you said _ and this is
probably not a direct quote,
"Fair market value would be the
amount of money that Mr. Wright
could repopulate his flock with."
Is that an accurate statement?
THE WITNESS: With equal type of
bird with equal quality.
THE COURT: Okay. But, then, you
went on to say that would not
include transportation. This is
a quote. "It is part of the fair
distribution system between
buyers and sellers." Now, is
that inconsistent?
THE WITNESS: I do not think that
it is, Your Honor. I thank that
market value is what I defined it
as getting the birds back and
—— =
forth to people. It is just my
judgment that was not
inconsistent.
THE COURT: In other words, Mr.
Wright could repopulate his flock
as iong as he left the flock with
the seller, but he could not
bring it to Pennsylvania, is that
correct?
THE WITNESS: He would have to
bring it to Pennsylvania.
THE COURT: Oh, you are going to
have to make up your mind now.
Are you going to pay him the
transportation cost and let [him]
repopulate his flock or are you
going to make him have a smaller
flock? Someone has to pay the
transportation cost. Now, if you
say that the fair market value is
the replacement cost of that
flock, then, do you have to
include transportation [in] fair
market value?
THE WITNESS: I just do not think
so. I understand your reasoning,
but that seems to be the part of
doing business. People buy and
sell birds, livestock, all of the
time.
THE COURT: Yes, but the
Department of Agriculture here
destroyed his flock. They are
mandated to pay him the fair
market value. You said that fair
market value is the replacement
cost. The replacement cost must
include transportation, should
it?
THE WITNESS: I do not think so,
Your Honor.
- 69 -
THE COURT: You keep saying that,
but you will not tell me why?
THE WITNESS: Because, I do not
think that is part of the value.
THE COURT: Well, how does Mr.
Wright replace his flock with the
same number of birds and the same
quality base upon your definition
of fair market value?
THE WITNESS: I am assuming that
under those circumstances, he
would pay for the transportation.
THE COURT: How can you say that?
THE WITNESS: It is not part of
the fair market value....
THE COURT: I have lost the logic
of replacement as being fair
market value, but no really being
able to replace the birds you
cannot afford to ship ... to your
farm ... the reason being that
—
the Government destroyed your
birds and refuses now to give you
enough money to rebuild your
flock?
THE WITNESS: I just [see] them
as two different indemnities.
One [is] fair market value that
we talked about in the appraisal,
and one is the transportation
cost, that I just have not
connected in one indemnity.
THE COURT: Tell me how he
rebuilds his flock, then? I will
repeat that question.
THE WITNESS: You go though the
appraisal value. You have to
find these birds and pay for
them, and your point is and I
think that is the fair market
value of those birds. Your point
is, how do you get them from
~~
point A to point B to his
premises? I assume that has been
the cost borne by Mr. Wright or
whoever.
THE COURT: Who caused that cost?
THE WITNESS: Who caused the
Avian Influenza?
THE COURT: No, who caused the
cost, the transportation cost in
rebuilding Mr. Wright’s flock?
THE WITNESS: We depopulated his
flock. If he is going to go back
into business, obviously, that id
directly related to his
depopulation.
THE COURT: So, it is the
Department of Agriculture’s
fault, in a sense. Not guilt,
but the Department of Agriculture
caused that cost to be raised as
@ EGCCCE. ces
M2 «
I do not know if you ever told
me what fair market value was?
THE WITNESS: It is the
replacement of that bird of equal
quality, same breeding.
THE COURT: But, none of the
costs of making sure that it is
the same bird and the _ same
quality, none of the costs--
THE WITNESS: The same quality.
Not the cost of getting it there.
Te. at 571-76. Dr. King was
authorized by the Secretary of Agriculture
to determine the fair market value of
plaintiff’s flock. It is obvious that Dr.
King arbitrarily and perhaps capriciously
decided that transportation costs. should
not be included in a fair market valuation.
Based on the clear weight of expert
evaluations and opinions, the court found
— oo
that these actions were not reasonable.
Transportation costs should have been
included at least in the circumstances of
this case as part of the Secretary’s
determination of fair market value _ to
repopulate plaintiff’s flock of breeder
birds. For a breeder of specialty poultry,
especially one who is developing bloodlines
and keeping particular breeds alive,
credible testimony at trial showed that
transportation costs can vastly exceed the
price of a particular bird, even a rarer
bird. Plaintiff provicged the expert
testimony of two witnesses as to these
transportation costs. Mr. Hans Schippers,
a breeder from Holland, provided testimony
which was, in general, most instructive and
helpful to the court. But, it was evident
that Mr. Schippers provided European market
values for replacing and _ transporting
plaintiff’s flock, not United States market
<5 °°
costs. Because there is no way for this
court to determine what Mr. Schippers’
figures might be in the United States
market, the court rejected his figures as a
basis for fair market value. However, his
testimony concerning 1) breeder value as
opposed to exhibition value, 2) plaintiff’s
flock and reputation in Europe, and 3) his
opinion that transportation costs should be
paid because of the great discrepancy in
costs between replacement and
transportation were very helpful to the
court.
The testimony of Dr. Charles Wabeck,
plaintiff’s other expert witness, was also
highly credible and instructive. His
evaluation added to the United States
prices of replacing plaintiff’s flock the
costs of transportation, which include both
the reasonable costs necessary for Mr.
Wright to ravel to and from particular
“=
breeders to evaluate specific birds and the
costs of transporting those suitable birds
when found to plaintiff’s place of
business. Although on their face _ the
disparity between the evaluation figures of
Dr. Skinner ($45,676.50) and Dr. Wabeck
($110,130.00) appear irreconcilable, after
studying the record as a whole, the court
was convinced that the difference is wholly
attributable to transportation costs. Dr.
Wabeck’s expert evaluation, which provided
evidence of the substantiality of these
transportation costs, confirmed this
finding.
Although USDA had three expert
evaluations, it never asked any of the
experts retained for an evaluation of
transportation costs. Even after this
court remanded the evaluations back to
USDA, directing it to re-evaluate the flock
on the basis of all the expert testimony
—
produced during discovery and in which
plaintiff's experts had discussed the
necessary inclusion of transportation
costs, and even after Dr. Skinner, the
Secretary’s own independent remand witness
that this court found so credible, told
USDA that transportation costs should be
considered, the Department made no
evaluation of transportation costs.
At trial, instead of refuting
plaintiff’s transportation cost claims,
defendant’s experts agreed with plaintiff’s
assertion that transportation costs must be
included in a breeder bird evaluation.
Therefore, this court accepted the
testimony it had received on the subject
from plaintiff’s expert, Dr. Wabeck. His
valuation of Mr. Wright’s flock at
$110,130.00 included transportation costs
as well as the cost of repiacing the birds
themselves. Accordingly, the court
“—_ 2
accepted the only credible testimony of
both plaintiff’s and defendant’s experts in
determining the reparation and
transportation costs of plaintiff’s flock:
$45,676.50 as the naked value of
plaintiff’s birds, as concluded by
defendant’s expert Dr. Skinner, and
$64,453.50 as the necessary transportation
costs for plaintiff’s particular flock, as
determined by plaintiff’s expert Dr.
Wabeck. The total sum for these _ two
elements of fair market value equals
$110,130.00.
3. Progeny Value and Lost Profits.
[7] Plaintiff also claimed that
progeny value and lost profits should have
been included as elements of the fair
market valuation of his flock. Plaintiff
asserted that because the government
quarantine disallowed any movement of
poultry within the quarantined area,
— =
plaintiff was denied profits for the period
of time in which plaintiff was prevented
from doing business because of the
government quarantine. Plaintiff requested
damages in lost profits from the sale of
birds that would have been produced from
November, 1983 through June, 1985.
Plaintiff further asserted damages in lost
progeny of those breeds destroyed by the
government ordered depopulation from June,
1985 onward. In sum, plaintiff claimed
damages in lost profits for one selling
season for his entire flock and damages in
lost progeny for the remainder of his
working lifetime. Defendant responded by
arguing that plaintiff was not entitled to
any lost profits under the statute, that
there were not established bloodlines of
either plaintiff or Mr. Miller, and that
progeny value was too speculative to merit
award.
=
I
As to plaintiff’s lost progeny claims,
plaintiff failed to overcome the threshold
inquiry: whether the birds destroyed were
in fact irreplaceable. Plaintiff’s expert
witness, Dr. Wabeck, testified that he
“cannot say for certain whether a bird is
irreplaceable or not...." Tr. at 161. In
contrast, all of defendant’s experts not
only provided replacement values for all
the birds destroyed, they all testified
without equivocation that, in the words of
Dr. Skinner, all of plaintiff’s birds
“could have been replaced ... in August of
1984 assuming a quality level suitable for
breeding...." See Letter to USDA from
Dr. John L. Skinner (April 3, 1989); see
also Testimony of Burnell Bortner, T. at
438-39. Therefore, plaintiff’s extended
claim for progeny value for twenty-seven
years was inappropriate. Plaintiff also
sought lost profits. He asserted that
— 6 6h
because the Secretary had earlier included
profits as part of the fair market value
measurement in Egq City II, it would be
unreasonable for the Secretary to deny
plaintiff profits in these similar
circumstances. We are persuaded that
plaintiff was entitled to some inclusion of
a measure of profits in the fair market
valuation of his flock because expert
testimony at trial established lost profits
as one of the elements necessary to a fair
market valuation. This testimony was
consistent with our findings that’ the
unique nature of plaintiff’s business as a
poultry breeder was recognized in the
regulation and that such compensation would
be necessary to further the already
identified congressional intent of
encouraging all poultry farmers to
cooperate with statutorily authorized
government action. This finding is further
—
consistent with the Secretary’s own
previous actions under these same statutes
in the similar Egg City case where the
Secretary not only included a measure of
lost profits in his determination of fair
market value but increased that measure
when he determined such action necessary
"in order to pay full compensation for the
destroyed chickens." Egg City II, F.2d at
1056.
Expert testimony at trial supported
including lost profit compensation in the
he determination of fair market value for
breeders of poultry. Fro example, Mr.
Bortner, defendant’s primary expert, in
response to a hypothetical based on the
facts of this case said, "I feel I should
be reimbursed [for lost profits])." Tr. at
403. Even defense expert Schallenberg
agreed. Tr. at 479-80.
02 <
; Testimony presented to the court also
conclusively showed that plaintiff’s lost
profits as a breeder were different than
the lost profits experienced by meat or egg
producing poultry farmers. For example,
egg producing poultry farmers can readily
enjoy profits soon after the replacement of
their flocks, while a poultry breeder
cannot. A poultry breeder derives profits
not from the sale of the replaced bird for
meat or from its quickly produced eggs, but
instead from the sale of new breeder birds
produced from existing mature breeder
birds. Therefore, a breeder’s operation is
not replaced by merely paying for the
replacement of the breeders alone as the
USDA attempted in this case. Testimony
established that the period of time
necessary for a poultry breeder to be in a
position to make profits from his breeding
operation is the well-known and well-
Eo
Gefined breeding season. Expert testimony
further showed the breeding season to be
from law winter through mid-summer, |
depending on the breed, and that
plaintiff’s main selling season was from
late spring to the end of 8 summer.
Plaintiff was under USDA quarantine from
its inception in November of 1983 through
the destruction of plaintiff’s flock in
July of 1984 until the quarantine was
finally lifted in June of 1985.
For the Secretary a to include
some compensation for lost post-
depopulation profits is contrary to
congressional intent because that would not
encourage poultry breeders to cooperate
When the court refers to "breeding
season," it means the entire period of time
per year during which eggs are hatched. A
hatching period is a subset of the larger
breeding season in which a bird produces
eggs that hatch. Therefore, as the court
has defined it, many breeds could have more
than one hatching period within a breeding
season.
- ) e
with necessary government disease
eradication actions. Including lost
profits as an element of fair market value
is consistent with the finding of the Court
of Appeals for the Federal Circuit under
similar circumstances in the already
mentioned Egg City II which involved the
same statutes at issue as in the present
action. In Egq City II, tiie Court of
Appeals upheld the Secretary’s discretion
to include a measure of lost profits under
these same statutes. Egg City II, 697 F.2d
at 1055-56. This court finds that had the
Secretary properly evaluated plaintiff’s
flock for its fair market value as
breeders, the Secretary would have included
a measure of lost profits in its
determination; the Secretary’s denial of
lost profits in the present circumstance
was therefore at least arbitrary.
——
At trial, defendant did not present
evidence as to what would be a proper
amount of lost profits should the court
award them. Instead, defendant merely
reiterated that plaintiff was not entitled
to progeny value or lost profits under
section 134a. The only testimony provided
this court in terms of determining the
proper amount of lost profits came from
plaintiff’s expert witness, Dr. Wabeck, and
from plaintiff himself. Plaintiff's
formula took a three-year average of chicks
produced per bird from plaintiff’s hatchery
and rounded that number to the nearest
whole number to represent the number of
chicks expected per bird per hatching
period for the breed in question.
Plaintiff's formula then multiplied that
average by plaintiff’s stated 1984
catalogue price for a chick of that breed
an age. This figure represented the total
“2
amount of money plaintiff could expect to
receive for those chicks produced by that
bird of that particular breed. Plaintiff
then determined from an examination of his
business profit and loss statements that
approximately one-half oof that amount
represented the cost of production and,
therefore, one-half of the total value was
subtracted to off-set production costs.
The resulting figure represented the amount
of profit plaintiff expected per bird per
breed per hatching period. Extending these
figures to represent the entire breeding
season showed plaintiff’s lost profits to
be $204,828.41.
In addition, plaintiff had added to
his figure the "raw value" of each bird.
Because those breeder birds are replaced,
it would represent a double recovery to
include the "raw value" figures here. To
The court notes that even if these breeder
birds producing the chicks were sold at the
i +
arrive at the proper lost profits
compensation figure, therefore, the court
subtracted plaintiff’s raw value totals
from plaintiff’s lost profit totals,
consistent with plaintiff’s formula, and
arrived at the figure of $204,828.41.
Therefore, $204,828.41 represents the
statutorily recoverable profits plaintiff
lost for one year.
As the evidence showed, however,
plaintiff was out of business for two
post-depopulation selling seasons.
Following the flock’s destruction in July
of 1984, the USDA’s quarantine on
plaintiff’s farms prevented plaintiff from
returning to business until it was lifted
in June of 1985. This USDA quarantine,
therefore, caused plaintiff to effectively
end of the breeding season for profit, that
profit would still not be recoverable as
plaintiff will now have the opportunity to
do with the replaced breeder what he would
have done with the destroyed breeder.
lose two breeding seasons, all of one
selling season and much of a second selling
season.” This is true because even if
plaintiff had begun breeding poultry
immediately after the quarantine was
lifted, the 120-day maturation period would
still have exceeded the 1985 selling
seasons In the earlier Egg City case, the
Secretary based his lost profit indemnity
on the amount of time following flock
depopulation that it would take a breeder
"to raise a chicken to profitable ... age."
Eqg City II, 697 F.2d at 1055.
Accordingly, the court finds that plaintiff
It is true that some of this damage was
caused by the PDA quarantine from April,
1983 to November, 1983 but, plaintiff is
not claiming damages arising during that
time period in this action. Moreover,
testimony at trial indicated that part of
the delay in getting plaintiff back into
business could be attributed to plaintiff a
he was unable to clean his premises as
required by statute. Regardless, defendant
did not argue this point and the court can
find no reason to take exception because of
this delay.
—= =
was entitled to the profits he would have
enjoyed in the second selling season lost
as a result of the USDA’s not lifting the
quarantine until the middle of the breeding
season as well as the profits lost during
the first season while under’ actual
quarantine. The total post depopulation
lost profit recovery due plaintiff is
therefore $409,656.82.
II. Damages to Property
[8] Plaintiff's second claim is for
$38,071.77 in property damages done by the
USDA in cleaning plaintiff’s premises. The
parties expressly agreed that USDA would
clean plaintiff's premises at the
government’s expense because plaintiff was
financially unable to perform the clean-up
himself and the delay in accomplishing this
clean-up required the avian influenza
emergency quarantine to continue long after
the disease had been eradicated in all
—
areas but plaintiff's two farms. The
agreement between plaintiff and defendant
governing the transaction gave defendant
the right to dispose of those articles
which in defendant’s estimate could not be
reasonably cleaned. Paragraph three of the
parties’ agreement provided:
[The USDA’s Animal and Plant
Health Inspection Service
(APHIS)] will attempt to clean
and disinfect all nest boxes,
partitions, drop boards, and
other items. However, it is
mutually understood and agreed
that nest boxes, partitions, drop
boards, and other items with
rusted wire or metal or [rotted]
wood [may] be disposed of if they
cannot be readily cleaned and
disinfected, as determined by
APHIS.
OO «
Tr. at 499. At trial, the APHIS official
in charge of the clean-up at both farms,
Mr. Gene Longwith, testified that he did
not believe that the government was liable
to plaintiff for the property destroyed
during the clean-up. Tr. at 521-30.
However, this case is governed by specific
regulations. See 9 C.F.R. Sections 53.5,
$3.8, 862.12, G1.318 (1964). Both the
implementing regulations of 21 U.S.C.
Section 1l14a and 21 U.S.C. Section 134a
provide for compensation for the value of
material destroyed during a government
ordered clean-up. 9 C.F.R. Sections 53.8,
81.15 (1984). Therefore, from the plain
meaning of the statute, defendant is
obligated to pay plaintiff the value of
those materials destroyed regardless of who
actually performed the clean-up. !°
Ve erthernons, Mr. Longwith,a party to the
formation of the agreement, admitted at
trial that there was no language in the
agreement between the parties which
Oe «
Accordingly, plaintiff is entities to
receive the value of the materials
destroyed during the clean-up. Factual
questions remain, however, of what property
was actually destroyed by the government
pursuant tot he agreement and the value to
be placed on that destroyed property.
Defendant argued that the property
destroyed was minimal, offering supporting
testimony of witnesses who were on the
scene during the clean-up. They did not,
however, convincingly contradict
plaintiff’s submission of photographic
evidence and notes taken at the time of the
destruction of plaintiff’s property. This
very convincing and largely undisputed
evidence strongly supported plaintiff’s
assertion that the project was not closely
managed by the government. The pictures
specifically stated that defendant would
not compensate plaintiff for items
destroyed pursuant to the agreement. oF.
at 527.
“—
showed tire tracks over knocked down
fences, various piles of materials outside
buildings, and workers throwing material
out of second-story windows onto the ground
below. None of defendant’s witnesses could
positively assure this court that the
damages plaintiff showed by photographic
evidence and notes taken at the time of the
clean-up did not occur at the hands of
defendant. On the contrary, testimony
presented by defendant showed otherwise.
Miss Joyce I. Witt, the government Animal
Health Technician working during the
clean-up, testified that she did not
destroy anything but that things might have
been destroyed by other government agents
during the clean-up. Tr. at 543-45. The
testimony of Mr. Longwith, whose attention
could not have been focused on two farms at
all times, was not persuasive. When asked
upon examination "how many people worked on
—.
the cleaning and disinfecting" she replied
"(i]t was never the same number. The first
day we had in the neighborhood of 18
people. We had 6 or 7 permanent federal
employees and 10, 1l, or 12 temporaries....
We never had the same number at any time."
Tr. at 530. In addition, Mr. Longwith’s
testimony showed that many of these workers
did not speak English and there were great
difficulties in getting them to understand
exactly what their jobs were. Tr. at
531.''the laxity of the operation as
factually presented at tiral, was not
consistent with sufficient management
supervision. The evidence presented was
consistent, however, with plaintiff’s
assertions of damage.
i PEP ac ae ane eae si
Defendant also offered the testimony of
Dr. Gerald Fichtner, director of the Avian
Influenza task force. He described the
condition of plaintiff’s premises at the
time of depopulation. These conditions
were irrelevant, however, as the damages
Claimed by plaintiff arose out of the later
government clean-up. Tr. at 483-87.
<—
One particularly large item of
contention between the parties,
representing $35,000.00 of plaintiff’s
total $38,071.77 claim, involved the
replacement of two 32h Robbins incubators.
The court, as finding of fact, was not
persuaded by plaintiff’s testimony that
these incubators were rendered unusabie
Plaintiff offered evidence that before the
clean-up there were five boxes of necessary
replacement parts, including back-up
thermostats and operating manuals, for the
incubators in plaintiff’s hatchery. During
the clean-up, the boxes, containing these
necessary materials, were apparently
Gestroyed. Plaintiff argued that the lack
of thermostats rendered the incubators
unusable. Neither party presented expert
testimony as to the value of the
thermostats. Defendant offered testimony
from Mr. Longwith that reed mercury
é 06.»
replacement thermostats are readily
available, along with operating manuals, at
a cost of $562.50. Plaintiff replied that
wafer-type thermostats were necessary for
his machine and that neither his machine
nor the necessary replacement parts for the
incubators were made by anyone in this
country anymore because the original
manufacturer had been out of business for a
long time and, therefore, no replacement
parts were readily available This,
plaintiff explained, necessitated the
$35,000 expenditure to replace the
V2 Plaintiff, however, did not
incubators.
provide convincing testimony that he had
made a thorough search for replacement
thermostats and that none could be found at
any location at any price.
trae ap a
Two functioning incubators are required,
with one serving a back-up to the other, to
insure consistent incubation during the
hatching process.
OF a
, P
a
The remainder of the items destroyed
consisted of either normal items expected
to be found on a poultry farm, from paper
egg trays to wooden skids and metal
waterers, or property destroyed by the
clean-up, such as the driven-down fence.
Plaintiff's witnesses more than
convincingly established these damages at
trial. The testimonies, photographic
evidence, and general circumstances of
chaos surrounding the clean-up operation,
lead the court to find that plaintiff met
its burden of persuasion on this portion of
its property damages claim and is entitled
to recover $3,071.77 claimed in property
damages.
CONCLUSION
The fair market value of plaintiff’s
flock should have been determined based on
their value as breeder birds, as described
and mandated by statute. Had the Secretary
— oe
properly evaluated plaintiff’s flock as
breeder birds, he would have included
repopulation costs including the purchase
price of the birds, transportation costs,
and post depopulation lost profits as
necessary elements of his reasonable
evaluation of "fair market value." By not
so evaluating plaintiff’s flock, the
Secretary acted unreasonably and contrary
to law. 21 U.S.C. Sections ll4a, 134a
(1982); 9 C.F.R. Sections 53.3, 81.14
(1984). Plaintiff is entitled to
$45,676.50 compensation for a base
replacement cost of its flock, $64,453.50
compensation for transportation costs, and
a lost profit compensation of $409,656.82
for two selling seasons, resulting in a
total fair market value compensation of
$519,786.82. Plaintiff has also p--evailed
on his’ statutorily prescribed property
damages claim for $3,071.77 as a result of
- 99 -
the clean-up of plaintiff's farms.
Therefore, the total amount due plaintiff
is $522,858.59. The Clerk of the Court is
directed to enter judgment accordingly.
IT IS SO ORDERED.
- 100 -
Frederick L. WRIGHT, III, et
al., Plaintiffs
The UNITED STATES, Defendant.
No. 520-87C.
United States Claims Court.
May 31, 1988.
Operators of poultry business whose
entire chicken flock was destroyed by
government agents after it was determined
to have avian influenza brought two suits
seeking compensation for destruction of the
flock and for damage caused by efforts to
clean and disinfect the property. The
United States District Court for’ the
- 101 -
/
Eastern District of Pennsylvania dismissed
both suits for lack of jurisdiction and
transferred them to the Claims Court. On
defendant’s motion to partially dismiss the
complaint for failure to state claims, the
Claims Court, Moody R. Tidwell, III, J.,
held that (1) plaintiffs stated a claim by
alleging that fair market value
determination pursuant solely to particular
statute and regulation was arbitrary,
capricious, or an abuse of discretion, and
(2) plaintiffs also stated claim with
regard to damage to property caused by
Cleaning and disinfecting; and (3) Fifth
Amendment taking claim did not lie.
Motion granted in part and denied in
part.
1. Animals - 37
Operators of poultry business whose
entire chicken flock was determined to have
avian influenza and which was destroyed by
- 102 -
federal agents stated a claim against the
government by alleging that fair market
value determination pursuant solely to
particular state and regulation was
arbitrary, capricious or an abuse of
Giscretion. 21 U.S.C.A. Section 134a.
2. Animals - 37
Operators of poultry business whose
entire chicken flock was determined to have
avian influenza and which was destroyed by
government agents stated a claim against
the government pursuant to statutes and
under a contractual theory arising out of
agreement, where operators alleged damage
due to cleaning and disinfecting of their
property by agents after flock owas
destroyed. 21 U.S.C.A. Sections 114a,
134a.
3. Federal Courts - 1073
re oe
Claims Court lacked jurisdiction over
claims that the government violated Fifth
and Fourteenth Amendment rights of due
process and equal protection where claims
could not be fairly interpreted to mandate
money damages U.S.C.A. Const. Amends. 5,
14.
4. Eminent Domain - 2(2)
Operators of poultry business whose
entire chicken flock was destroyed by
federal agents because it had _ avian
influenza could not assert a Fifth
Amendment taking claim against the
government; when acting under the police
power the Sesesuataen of diseased animals
requires no compensation. U.S.C.A.
Const.Amend. 5.
Kenneth C. Sandoe, Myerstown, Pa., for
plaintiffs.
- 104 -
Paul J. Ehlenbach, Washington, D.C.,
with whom was Asst. Atty. Gen. John R.
Bolton, for defendant.
ORDER
MOODY R. TIDWELL, III, Judge:
This action came before the court on
defendant’s motion to partially dismiss
plaintiffs’ complaint for failure to state
valid claims within the jurisdiction of the
court. In its motion defendant contended
that plaintiffs’ claims are governed
exclusively by 21 U.S.C. Section 134a and 9
C.F.R. Sectin 81 and that all other causes
of action are without this court’s
jurisdiction. Plaintiff responded that
both 21 U.S.C. Sections 11l4a and 134a and
their accompanying regulations are
applicable. In addition, plaintiffs
asserted claims under due process, equal
protection and fifth amendment taking.
FACTS
- 105 -
Plaintiffs, Frederick L. Wright, III,
Marjorie Wright, Fred L. Wright, Inc., T/A
Willow Hill Hatchery, Willow Hill Poultry
Farms and Willow Hill Poultry, operated a
poultry business located in Berks County,
Pennsylvania. The operation included
hatching and breeding operations and custom
poultry processing. Distribution was
national and international. The suit
arises from the disposal of 4,500 of
plaintiffs’ chickens by the Animal & Plant
Health Inspection Service of the United
States Department of Agriculture.
In April 1983, there was an outbreak
of highly pathogenic avian influenza’ among
THighly pathogenic avian influenza is:
(a) disease of poultry caused by any
influenza virus Type A that results in not
less than 75 percent mortality within 8
days in at least 8 healthy susceptible
chickens, 4-8 weeks old, :noculated by the
intramuscular, intravencus, or caudal
airsac route with bacteria-free infectious
allantoic or cell cuiture fluids and using
standard laboratory operating procedures to
assure specificity. 9 C.F.R. Section 81.1.
- 106 -
poultry in Pennsylvania. In November of
that year defendant quarantined the
geographic area in which plaintiffs
operated their business. On or about
December 23, 1983, defendant implemented
various other prohibitions and restrictions
regulating the transportation of poultry
and related articles out of and into the
quarantine area. part of plaintiffs’
operation was at that time inside the zone
and part was outside the zone. In February
1984, the quarantine zone was expanded to
include plaintiffs’ entire operation. On
April 20, 1984, plaintiffs’ poultry flock
was tested and no presence of the avian
influenza virus was found. A second
examination of the flock indicated that
plaintiffs’ poultry eggs tested positive
for the virus. On July 23, 1984, defendant
informed plaintiffs that the destruction of
plaintiffs’ flock was necessary in an
—
effort to eradicate the disease.
Plaintiffs asserted that defendant, on July
31, 1984, averred that it was willing to
Giscuss allowing plaintiffs to save a
certain number of healthy birds of a rare
blood line from destruction. However, on
August 1, 1984, two federal marshalls, four
state police officers and seventy five
other federal employees entered plaintiffs’
properties and slaughtered the _ entire
flock.
Some weeks later, defendant, pursuant
to 9 C.F.R. Section 81.14 offered
plaintiffs $33,025.44 as fair market value
of the flock based upon defendant’s
appraisals which defendant had conducted on
July 7, 1984 and August l, 1984. A similar
appraisal provision appears in 9 C.F.R.
Section 53.3. Plaintiffs rejected the
offer of compensation as inadequate.
In April 1985, pursuant to an
agreement of the parties, defendant cleaned
and disinfected plaintiffs’ property. The
quarantine on plaintiffs’ premises was
lifted on May 20, 1985. Thereafter,
plaintiffs filed two suits against the
United States in the U.S.C. District Court
for the Eastern District of Pennsylvania,
pursuant to 21 U.S.C. Sections 114a and
134a, and 9 C.F.R. Sections 50, 51, 53, 54,
56 and 81, seeking compensation for
destruction of its flock and damage to its
property caused by defendant’s efforts to
clean and disinfect the property. The
district court dismissed both suits for
lack of jurisdiction and transferred them
to this court. Wright v. United States
Dep’t of Agric., No. 86-3171 (E.D. Pa. July
14, 1987) [available on WESTLAW, 1987 WL
13756).
DISCUSSION
- 109 -
Statutory Claim
{1] Plaintiffs’ complaint asserted
that the Secretary of Agriculture’s
determination of the fair market value of
plaintiff’s flock pursuant solely to 21
U.S.C. Section 134a and 9 C.F.R. Section 81
was arbitrary, capricious or an abuse of
discretion. Plaintiffs cannot prevail on
the merits unless this is proven. Julius
Goldman’s Egq City v. United States, 214
Ct.Cl. 345, 351, 556 F.2d 1096, 1099 (1977)
(Egg City I). The motion currently before
the court does not go to the merits but
seeks to dismiss certain of plaintiffs’
claims asserting that the court lacks
jurisdiction. Plaintiffs contended that
the Secretary’s computation of compensation
should be governed by 21 U.S.C. Section
114a as well as section 134a, and their
implementing sequbations, 9 C.F.R. Sections
53 an d8l1. Defendant contended that review
- 110 -
of the Secretary’s computation of
plaintiffs’ claim should be limited to
application of 21 U.S.C. Section 1l4a and 9
C.F.R. Section 53 should be considered
together with 21 U.S.C. Section 134a and 9
Ci: FR. Section 81 in reviewing the
determination by the Secretary of fair
market value of the destroyed poultry and
the value of property damaged.
The parties’ contentions arose because
21 U.S.C. Section 114a an 9 C.F.R. Section
53 address "the control and eradication of
any communicable diseases of livestock or
poultry” without expressly including avian
influenza, while 21 U.S.C. Sectin 134a and
9 C.F.R. Section 8l expressly address avian
influenza.
The starting point for the
interpretation of a statute is in the
statutory language itself. American
Tobacco Co. v. Patterson, 456 U.S.C. 63,
- 111 -
68, 102 S.Ct. 1534, 1537, 71 L.Ed.2d 748
(1982). The avian influenza at issue is
Clearly within the language of both
provisions, but the court is asked to
decide whether one provision should be
applied exclusive of the other contrary to
the general rule that statutory provisions
are to be construed not in isolation but
together so as to produce a harmonious
whole. Philbrook v. Glodgett, 421 U.S.C.
707, 713, 95 S.Ct. 1893, 1898, 44 L.Ed.2d
525 (1975) (citing United States v. Heirs
of Boisdore, 49 U.S.C. (8 How.) 113, 122,
12 L.Ed. 1009 (1849); Kokoszka v. Belford,
417 U.S.C. 642, 650, 94 S.Ct. 2431, 2436,
41 L.Ed.2d 374 (1974) (citing Brown v.
Duchesne, 60 U.S.C. (19 How.) 183, 194, 15
L.Ed. 595 (1856)); United Mine Workers v.
Andrus, 581 F.2d 888, 892 (D.C.Cir.1978),
cert. denied sub nom, Carbon Fuel Co. v.
~ 892 -
Andrus, 439 U.S.C. 928, 99 S.Ct. 313, 58
L.d.2d 321 (1978); Candelaria v. United
States, 5 Cl.Ct. 266, 272 (1984).
Plaintiffs asserted that 21 U.S.C.
Sections 114a and 134a should be read in
conjunction with one another. Section ll4a
of Title 21 of the United States Coe
authorizes the Secretary to "control and
eradicate any communicable diseases of
livestock or poultry ... including the
payment of claims growing out of
destruction of animals (including poultry),
and of materials, affected by or exposed to
any such disease." 21 U.S.C. Section 1l4a
(parenthetical in original). Similarly, 21
U.S.C. Section 134a provides that’ the
Secretary, "in order to guard against the
introduction or dissemination of a
communicable disease of livestock or
poultry, may seize, quarantine, and dispose
of, in any reasonable manner" diseased
- 413 -
poultry. Furthermore, the Secretary is
directed to "compensate the owner of any
animal, carcass, product, or article
destroyed pursuant to the provisions of
this section." 21 U.S.C. Section 134a(d).
The United States Court of Claims
offered some guidance as to the
interrelationship of 21 U.S.C. Sections
1l14a and 134a. In Julius Goldman’s Egg
City v. United States, 214 Ct.Cl. 345, 556
F.2d 1096 (1977) (Eqq City I), the court’s
analysis combined the application of
sections 1l14a and 134a. That court held:
The case concerns a lesser-known
but far-reaching federal
authority. Congress has given
the Secretary oof Agriculture
power to “control and eradicate
any communicable diseases of
livestock or poultry ... which in
the opinion of the Secretary
- 114 -
constitute an emergency and
threaten the livestock industry
of the country," and has also
authorized "the payment [by the
Secretary] of claims growing out
of the destruction of animals
(including poultry), and of
materials, affected by or exposed
to any such diseases, in
accordance with such regulations
as the Secretary may prescribe."
21 U.S.C. Section 114a. This
power is spelled out in more
detail in 21 U.8.C. Sectin
134a(a) and (b), including the
right to seize, quarantine, and
dispose of animals which are
found to have been affected with
or exposed to any such dangerous
or communicable disease.
Egg City I, at 348, 556 F.2d at 1097.
bee. a
Plaintiffs have asserted that the Egg
City I rationale should apply in this case
and that 9 C.F.R. Section 53 still further
elaborates factors of the Secretary to
consider in the computation of fair market
value pursuant to 21 U.S.C. Sections ll4a
and 134a and 9 C.F.R. Section 81. The
court notes that 9 C.F.R. Section 53 was
promulgated before 21 U.S.C. Section 134a
and 9 C.F.R. Section 681. The court
believes that the statutory authority under
which section 8l was later promulgated
included both 21 U.S.C. Sections 1l4a and
134a and that 9 C.F.R. Section 53 sheds
helpful light on the provisions considered
as a whole. Section 53 appears to serve as
a basis for the later section 8l.
Regulation 9 C.F.R. Section 81.14 states
that "[pJoultry, carcasses or parts
thereof, egg,s products, or articles
reguired to be destroyed ... shall be
~ A16-
appraised.... The appraisal shall be the
fair market value at the time of
destruction...." It appears that under 9
C.F.R. Section 53.3b the Secretary may have
less discretion in determining the fair
market value because it mandates
consideration of more factors. It states
that "[t]he appraisal of animals shall be
based on the fair market value and shall be
determined by the meat, egg production,
Gairy or breeding value of such animals.
Animals may be appraised in groups
providing they are the same species and
type."" Therefore, when the regulations are
construed together, the Secretary is aided
by additional factors when establishing
fair market value of destroyed animals.
Plaintiffs asserted that specialty birds
involving rare and irreplaceable blood
lines were slaughtered and that fair market
compensation should include breeder and
progeny value. The court believes that it
is not necessarily precluded from
considering the whole statute for a proper
fair market value determination because the
quality and value of plaintiffs’ rare birds
may fall under the factors to be considered
in 9 C.F.R. Sectin 53. Therefore, there is
a possibility that the Secretary’s
computation for fair market value was
arbitrary, capricious or an abuse of
discretion.
This construction is supported by
Julius Goldman’s Egg City v. United States,
697 F.2d 1051 (Fed.Cir.), cert. denied, 464
U.S.C. 814, 104 8.Ct. 686, 78 L.Ba.2d. 83
(1983) (Egg City II). That court held:
The appellant also contends that
the sum of the two indemnities
did not adequately compensate it
for the fair market value of its
destroyed flock. The statute
<2)
etl LO ELLE EET S
provides that the Secretary
"shall" compensate the owners of
diseased animals, destroyed under
the section; and that "[s]Juch
compensation shall be based upon
the fair market value as
determined by the Secretary, of
any such animal ... at the time
of the destruction thereof." 21
U.S.C. Section 134a(d)(1970).
The fair market value of chickens
therefore "shall be determined by
the ... egg production ... value
of such animals." o. OF R.
Section 53.3(b) (1975).
Id. at 1054.
Egg City II is cited for the proposition
that 9 C.F.R. Section 53 may properly be
considered with the later enacted 21 U.S.C.
Section 134a, as plaintiffs here urge.
Defendant’s assertion is that the statutes
“499 -
and regulations are mutually exclusive
because the language of section 1l134a
confers the Secretary broad power to
“seize, quarantine, and dispose" not
conferred by section 114a’s power to
"control and eradicate." Egg City II does
not support that assertion. The court
agrees with defendant’s statement in its
reply brief that "whenever the Secretary
acts pursuant to section 134a, he also acts
pursuant to section 1l4a." The court notes
that defendant also stated in a footnote
that the converse would not be true.
Defendant also cited Yancy v. United
States, 10 Cl.ct. 311 (1986), to support
its contention that sections 1l4a and 134a
are incompatible. In Yancey, defendant
quarantined plaintiffs’ poultry business
and did not permit plaintiff to ship
turkeys or hatch; eggs interstate despite
test results indicating plaintiff’s turkeys
- 120 -
to be both healthy and unexposed to the
avian virus. Plaintiff sold the flock for
meat after deciding that keeping the flock
alive was uneconomic. Plaintiff later sued
for compensation. The court held that 21
U.S.C. Section 134a was inapplicable for a
Claim of compensation because defendant
failed to satisfy the requirements of
either sections 134a(a) or 134a(b). The
court held that 21 U.S.C. Section 134a(a)
did not apply because plaintiff’s flock
were not yet moving or moved in interstate
commerce and had not been affected or
exposed to the disease. The court also
held 21 U.S.C. Sectir 134a(b) not to apply
because the Secretary ha not declared an
emergency, plaintiffs’ stock was not
affected or exposed, the stock was not
ordered destroyed, and stock sold as meat
is not a compensable disposal under the
statutes. The court also found plaintiffs’
» $20
Claim not compensable under section ll4a
and section 53 based on nearly the same
criteria; the stock was not contaminated by
or exposed to the disease, the Secretary
had not required the flock destroyed, and
the flock was not destroyed for purposes of
the regulatory payment program. Yancey, at
316.
There is no evidence in Yancey
suggesting that the court believed 21
U.S.C. Sections 1l4a and 134a to be
mutually exclusive as defendant here
contended. To the contrary, Yancey
considered both section 1l4a and 134a as
possibly applicable in holding plaintiff’s
Claim not compensable. In any event Yancey
is distinguishable on its facts. In the
present case a state of emergency was
declared in November of 1983 due to the
outbreak of avian influenza. There was no
emergency in Yancey. In this case,
plaintiff's flock was determined by
defendant to be infected with the avian
virus and was ordered destroyed.
Destruction was executed by defendant. In
Yancey, plaintiff’s flock was healthy and
not required by defendant to be destroyed.
Also, in Yancey the sale of the flock as
meat was not cognizable under section 1l4a
or section 134a. Furthermore, there is no
indication by the Yancey court that had
plaintiff’s flock been destroyed pursuant
to an order by the Secretary that fair
market value would not have included the
considerations in section 53.3.
Defendant’s partial motion to dismiss
with respect to the applicability of both
21 U.S.C. Section 1l14a and 9 C.F.R. Section
53 is, therefore, denied.
{2] Additionally, although this
court’s discussion addressed the
compensation of plaintiffs destroyed flock,
- 123 -
+
the court is of the opinion that it is
possible that plaintiffs may also recover
property damages pursuant to 21 U.S.C.
Sections 114a and 134a and under a
contractual theory arising out of the
"Agreement" of March 28, 1985 due to
defendants cleaning and disinfecting of
plaintiffs property. Therefore, the motion
to dismiss a claim for property damage is
denied.
Due Process and Equal Protection Claim
[3] Plaintiffs asse-ted that
defendant violated their fifth and
fourteenth amendment rights of due process
and equal protection. These contentions
are rejected because this court lacks
jurisdiction over claims because they
cannot be fairly interpreted to mandate
money damages against the United States
when violated. Carruth v. United States,
224 Ct.Cl. 422, 445, 627 F.2d 1068, 1081
(1980); Muehlen v. United States, 209 Ct.
Cl. 690, 690, 522 F.2d 533 (1976); Morgan
v. United States, 12 Cl.Ct. 247, 253
(1987); Bounds v. United States, 1 Cl.Ct.
251, 216 (1982), aff'd, 723 F.2d 68
(Fed.Cir.1983). Since neither the due
process clause nor the equal - protection
clause provide monetary relief, the court
2
lacks jurisdiction over such claim.
United States v. Testan, 424 U.S.C. 392,
400, 96 S.Ct. 948, 954, 47 L.Ed.2d 114
(1975); Eastport Steamship Vv. United
States, 178 Ct.Cl. 599, 605-09, 372 F.2d
1002, 1007-10 (1967).
Taking Claim
3----~--------------
This court has been characterized in the
parties briefs as a court of "limited"
jurisdiction. This is the "shorthand"
method of describing the court’s
jurisdiction. Rather, the court is one of
"specific" jurisdiction. While its
jurisdiction is limited to money mandating
provisions of law, regulations, contracts,
etc., that jurisdiction is specified, with
few exceptions, to lie solely within this
court. It is more than a matter of
semantics.
- 125 -
[4] Plaintiffs also asserted an
unlawful fifth amendment taking for which
just compensation is required. However,
when acting under the state police power
the destruction of diseased animals
requires no compensation. Cf. Miller v.
Schoene, 276 U.S.C. 272, 279-80, 48 S.Ct.
246, 247-48, 72 L.Ed. 568 (1928); Loftin v.
United States, 6 Cl.Ct. 596, 612 (1984),
aff'd, 765 F.2d 1117 (Fed.Cir.1985). the
basic reasoning used by the courts in
support of this exercise of police power
without compensation is that such diseased
animals are obnoxious to the public health.
Where public interest is involved,
preferment of that interest over’ the
property interest of the individual, even
to the extent of its destruction, is not
unconstitutional. Miller, 276 U.S.C. at
279-80. 48 S.Ct. at 247-58; Loftin, at
611-12. This court agrees with the
rationale in Loftin that "[t]Jhe diseased
animals in this case can reasonably be
considered a public nuisance. It follows
then that no compensation for the
destruction of these animals was required.
However, Congress acting under the commerce
clause in passing essentially a police
regulation saw fit to compensate
owners...." Lottin, 6 Cl.ct. at 612.
Therefore, under the authority of Miller
and Loftin and on the facts of this case, a
fifth amendment taking claim does not lie.
CONCLUSION
Defendant’s motion to dismiss is
granted in part and denied in part.
Plaintiffs’ claims based upon lack of due
process, equal protection and fifth
amendment taking are dismissed as being
outside of the jurisdiction of this court.
IT Is so ORDERED.
92? -
UNITED STATES COURT OF APPEALS FOR THE
FEDERAL CIRCUIT
90-5089, -5096
FREDERICK L. WRIGHT, III
and MARJORIE WRIGHT, his
wife, and FRED L. WRIGHT, INC.,
t/a WILLOW HILL HATCHERY, WILLOW
HILL POULTRY FARMS and WILLOW HILL
POULTRY,
Plaintiff/Cross-Appellant,
THE UNITED STATES,
Defendant, Appellant.
- 128 -
DECIDED: February 12, 1991
Before MARKEY, MAYER and MICHEL, Circuit
Judges.
PER CURIAM.
DECISION
The judgment of the United States
Claims Court awarding Wright $522,858.59
for the destruction of his flock and
property pursuant to the United States
Department of Agriculture’s (USDA’s) lethal
avian influenza eradication program in
Pennsylvania is affirmed in part and
reversed in part. an 22: Sl. ce. $90
(1990). No costs.
OPINION
No. 90-5089: Both the regulations
implementing section 1ll4a and section 134a
‘itself specify that Wright is entitled to
the "fair market value" of his flock at the
a ae -
time of its destruction. ae Beee.€.
Sections ll4a, 134(d) (1988); 9 C.F.R.
Section 53.3(b) (1990). "Fair market
value" is a "general concept long known to
the law, with ascertainable out boundaries
' and not unlimited in its scope." Julius
Goldman's Egg City v. United States, 556
F.2d 1096, 1100 (Ct. Cl. 1977) (Egg City
I). It “is generally defined as ‘the price
at which property would change hands in a
transaction between a willing buyer and a
willing seller, neither being under
compulsion to buy or sell, and both being
reasonably informed as to all relevant
facts.’" Julius Goldman’s Eqq City v.
United States, 697 F.2d 1051, 1054 n.3
(Fed. Cir. 1983) (Egg City II) (quoting
Miller v. United States, 620 F.2d 812, 825
(Ct. Cl. 1980)). How fair market value is
- 130 -
defined is a legal question; what
constitutes fair market value in a
particular case is a factual matter.
The Claims Court appears to have
confused the two. It expanded’ the
Gefinition of fair market value to include
"transportation costs incidental to a
breeder’s repopulation of his’ flock"
because "the majority of expert witnesses
at trial ... agreed that they expected
transportation costs to be paid in these
circumstances." |) ee ee: Poe |
Similary, it awarded over $400,000 in
post-destruction lost’ profits "because
expert testimony at trial established lost
profits as one of the elements necessary to
a fair market valuation." Id. at 603.
That experts in the art of valuing poultry
so define "fair market value" does not make
that definition legally correct.
Notwithstanding the opinions credited by
- 131 -
the court, “fair market value" at the time
of destruction is equivalent neither to
"replacement cost" nor to “value expected
if no disease exposure had occurred"--—non-
statutory measures that might include the
transportation costs and lost profits
erroneously awarded here.
Egg City II is not to the contrary.
We repeatedly stressed that the initial and
supplemental indemnities paid their
together represented the fair market value
of the flock destroyed; the supplemental
indemnity was not a separate payment to
compensate for lost profits until the flock
could be replaced. 697 F.2d at 1055. USDA
was forced to use a complicated and
somewhat confusing measure of fair market
value because, unlike the situation here,
it "found that there was no actual market
for chickens of various ages in an egg
rancher’s flock." Id. (emphasis added).
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We concluded by noting that "the statute
required only payment of fair market value
of the chickens at the time of destruction,
not payment of profits after destruction."
Id. at 1057.
In this case, the experts’ valuation
of Wright’s flock as breeders ranged from
$34,365.44 to $45,329.50, exclusive of
transportation costs and lost profits.
USDA’s original appraiser, Bortner, settled
on the lower figure after the court
remanded the case to USDA for a re-
evaluation of Wright’s flock as breeders
rather than exhibition birds. Two other
experts agreed with him: Wunderlich,
retained by USDA after the remand, and
Schallenberg, who served as one of
plaintiff’s experts and who accompanied
Bortner at the original evaluation and
testified at trial that "at the time of
evaluation he could see no greater value in
« 139 -
me
the flock as breeders than as exhibition
birds." 19 Cl. Ct. at 599. USDA relied on
the Bortner/Schallenberg appraisal largely
because, of all the experts valuing the
flock, only they had seen is shortly before
its destruction. Id. at 598.
Nevertheless, the court’ substituted
its judgment for that of USDA. It
preferred the deposition testimony of
Skinner because he "displayed independent
“whoueh urged to do so, we need not decide
whether USDA acted pursuant to section
1l4a, section 134a, or both. Even if the
assertedly "narrower" valuation regulation
under section 1l4a applies -- "The
appraisal of animals shall be based on the
fair market value and shall be determined
by the meat, egg production, dairy or
breeding value of the animals, =. Seal ole
Sectin 53.3(b) (1990) (emphasis added) --
rather than that under section 134a -- "The
appraisal shall be the fair market value at
the time of destruction ...," 9 C.F.R.
Section 81.14 (1990) -- USDA complied. | The
record shows that USDA did value the flock.
specifically as breeders and did adjust its
original appraisal, based on the value as
exhibition birds, accordingly. That the
adjustment was minor is no reason to
question the truth of USDA’s stated basis
for its final appraisal, especially in
light of Schallenberg’s testimony.
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ee
understanding of the breeder industry and
the condition of [Wright’s] birds at the
time of their destruction" -- despite never
having seen the flock -- and because he
testified ciearly and unequivocally that he
evaluated the flock based on the value of
the birds as breeders. Id. at 599. But
the court is not free to decide the issue
of fair market value de novo. It can void
determina‘ions by USDA only if they are
arbitrary, capricious, an abuse of
discretion, or violative of the statutory
standard. Egg City I, 556 F.2d at 1100.
That is not the case here. On this record,
the court should have affirmed USDA’s
valuation of $34,365.44.
No. 90-5096: The trial court found
that Wright "failed to overcome’ the
threshold inquiry: whether the birds
destroyed were in fact irreplaceable." 19
Gi. Ge. Bt Gea. Though the record does
- 135 -
contain some testimony to the contrary, we
are not persuaded of clear error.
Accordingly, Wright is not entitled to
compensation for the "lost progeny value"
of his flock.
Wright similarly failed to meet his
burden of showing that replacement
thermostats for the two incubators were
unavailable. Longwith’s testimony
independently supports the government’s
claim that replacement thermostats existed.
USDA therefore did not need, and in fact
the court did not rely on, government
exhibit No. 60, which Wright argues was
inadmissible hearsay. See id. at 606.
Given the conflicting testimony of Longwith
and Wright on this point, we cannot say the
court was wrong in concluding that the
government did not render the two
incubators permanently inoperable.
= 196 -
UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT
89-5089, -5096
FREDERICK L. WRIGHT, III
and MARJORIE WRIGHT, his
wife, and FRED L. WRIGHT, INC.,
t/a WILLOW HILL HATCHERY, WILLOW
HILL POULTRY FARMS and WILLOW HILL
POULTRY,
Plaintiffs/Cross-Appellant,
Vv.
THE UNITED STATES,
Defendant-Appellant.
ORDER
Before MARKEY, Circuit Judge, MAYER,
Circuit Judge, MICHEL, Circuit Judge
A petition for rehearing having ben
filed in this case,
UPON CONSIDERATION THEREOF, it is
ORDERED that the petition for
rehearing be, and the same hereby is,
denied.
The suggestion for rehearing in banc
is under consideration.
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The mandate will issue on March 22,
1991.
Dated: March 15, 1991
- 138 -
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.