Picazo v. Aptos Berry Farms, Inc.

FILED

NOT FOR PUBLICATION

APR 18 2025 UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

RICARDO PICAZO, DBA Salinas Farms, No. 24-2089

Plaintiff - Appellant, D.C. No.

5:23-cv-02735-SVK v. APTOS BERRY FARMS, MEMORANDUM* INC.; DRISCOLL’S, INC.,

Defendants - Appellees.

Appeal from the United States District Court for the Northern District of California

Susan G. Van Keulen, Magistrate Judge, Presiding Argued and Submitted April 10, 2025 San Francisco, California*

Before: S. R. THOMAS, PAEZ, and MILLER, Circuit Judges.

Ricardo Picazo (“Picazo”) appeals the district court’s dismissal of his claims against Aptos Berry Farms (“Aptos”) and Driscoll’s, Inc. (“Driscoll’s”) under § 499b(4) of the Perishable Agricultural Commodities Act (“PACA”). See 7 U.S.C. § 499b(4). Because the parties are familiar with the factual and procedural history of the case, we need not recount it here. We have jurisdiction pursuant to 28 U.S.C. § 1291. We affirm.

“We review de novo a district court’s order granting a motion to dismiss under Fed. R. Civ. P. 12(b)(6) for failure to state a claim.” Boquist v. Courtney, 32 F.4th 764, 773 (9th Cir. 2022). To avoid dismissal, the plaintiff must allege facts sufficient to “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

1. Picazo cannot assert a PACA claim against Aptos because Aptos does not meet the definition of a commission merchant, dealer, or broker. See 7 U.S.C. § 499a(b)(5)–(7). Picazo has not plausibly alleged facts supporting his assertion that Aptos markets and sells perishable agricultural commodities. Picazo also has not alleged that Aptos receives perishable agricultural commodities on behalf of Driscoll’s. See 7 U.S.C. § 499a(b)(5).

2. Picazo has not plausibly alleged that Aptos acted as an agent of Driscoll’s when Aptos contracted with Picazo to grow strawberries or when transacting with Picazo. While some of Picazo’s factual allegations suggest a possible agency relationship, they are insufficient to plausibly allege that Aptos acted within the scope of its authority as an agent when transacting with Picazo. We do not credit Picazo’s “[t]hreadbare recitals” of an agency relationship. Iqbal, 556 U.S. at 678.

3. Picazo cannot assert a PACA claim against Driscoll’s because Picazo did not transact with Driscoll’s. Section 499b(4) makes the failure to account or pay promptly unlawful in regards to only “the person with whom such transaction is had.” 7 U.S.C. § 499b(4). PACA liability thus extends only to the parties to a transaction. See Iwata v. W. Fruit Growers, 90 F.2d 575, 577 (9th Cir. 1937).

Driscoll’s was not a party to Picazo’s written contract with Aptos to grow strawberries.1 The contract states that Driscoll’s is instead a third-party beneficiary. See Hom v. Petrou, 282 Cal. Rptr. 3d 209, 217 (Ct. App. 2021) (“[B]y definition, a third party beneficiary is not a party to the agreement . . . .”).

Additionally, Picazo has not plausibly alleged that Driscoll’s participated in a “[j]oint account transaction” with Picazo and Aptos. 7 C.F.R. § 46.2(s). Parties to a joint account transaction must participate in a “limited joint venture arrangement whereby they agree to share in a prescribed manner the costs, profits, or losses resulting from such transaction.” Id. Here, the evidence indicates that the parties did not intend to enter into a joint venture. The written contract contains a “No Joint Venture” clause stating that the contract “does not create a joint venture or a partnership.” And the parties did not share a joint interest in the strawberries or have mutual control over the enterprise, which are hallmarks of a joint venture. See Shell Oil Co. v. Prestidge, 249 F.2d 413, 415–16 (9th Cir. 1957). Driscoll’s maintained title to the strawberries, and controlled the use of its patent as well the packaging, distribution and sale of the strawberries, while Picazo and Aptos had only a limited right to grow the strawberries. Thus, Picazo has not plausibly alleged that Picazo, Aptos, and Driscoll’s formed a limited joint venture and entered into a “[j]oint account transaction.” 7 C.F.R. § 46.2(s). There is no other basis to find that Picazo transacted with Driscoll’s, so Picazo cannot assert a PACA claim against Driscoll’s.

AFFIRMED.2