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The Perishable Agricultural Commodities Act, "PACA," is intended to protect growers and suppliers from the unfair practices of commission merchants, dealers, and brokers in dealing with perishable commodities.59 PACA is found in 7 U.S.C. §§ 499a through 499s. Section 499e(c)(2) generally imposes a statutory trust on agricultural commodities received, any products derived from them, and any receivables or proceeds from their sale, which must be maintained for the benefit of the unpaid suppliers, sellers, or agents who provided the commodities until full payment has been made.
Once a seller has perfected its interest in PACA trust funds, it is not required to trace the assets to which its trust applies because the PACA trust attaches to all of the buyer's produce-related inventory and the proceeds therefrom.60 The PACA claim in entitled to full payment ahead of all other claims, including secured claims,61 and can even result in disgorgement of funds collected by a receivables financier.62
A number of circuits have held that individual corporate officers can be held personally liable for breaching the fiduciary duty to protect PACA trust assets.63 This does not necessarily
59 George Steinberg and Son, Inc. v. Butz, 491 F.2d 988 (2d Cir. 1973), cert. denied, 419 U.S. 830 (1974).
7 U.S.C. § 499e(c)(1). 61 C.H. Robinson Co. v. Alanco Corp., 239 F.3d 483 (2d Cir. 2001)(PACA claim is superior to attorneys' lien). 62 In re Southland + Keystone, 132 B.R. 632 (9th Cir. BAP 1991). 63 Weis-Buy Services, Inc. v. Paglia, 411 F.3d 415 (3d Cir. 2005)(containing a good summary of the origin and purpose of PACA); Patterson Frozen Foods v. Crown Foods Int'l, 307 F.3d 666 (7th Cir. 2002); Golman-Hayden Co. v. Fresh Source Produce Inc., 217 F.3d 348 (5th Cir. 2000); Sunkist Growers, Inc. v. Fisher, 104 F.3d 280 (9th Cir. 1997).
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