Amended by Stats. 1979, Ch. 871.
A person shall not act as a processor or a cash buying processor unless he has first obtained a license as provided in this chapter or in Section 56574.
Article 5 - Processor’s License
California Food and Agricultural Code — §§ 55521-55530
Sections (20)
Amended by Stats. 1979, Ch. 871.
Every person, before acting as a processor or a cash buying processor, shall file an application with the director for a license to so act. The application, unless it is an application for a conjunctive processor’s license pursuant to Section 56574, shall be accompanied by the application fee which is prescribed by Article 16 (commencing with Section 55861) of this chapter.
Amended by Stats. 1991, Ch. 733, Sec. 1.
(a)It is unlawful for a licensee that has changed its legal entity to do any of the following:
(1)Continue to operate after the change.
(2)Purchase or handle any farm product from a person who had a farm product contract with the former licensee at the time of the change in entity without notifying that person, in writing, of the change in entity.
(3)Use any invoice, contract, or other document associated with the purchase, consignment, or brokerage of any farm product that identifies the former licensee unless the new entity is conspicuously identified on the same invoice, contract, or other document as the entity responsible for the transaction.
(b)The new entity shall notify the director in writing of the change in legal entity within 15 days of the change. The new legal entity shall, before it conducts business that requires a license, obtain a new license for the business.
(c)Notwithstanding subdivision (b), if a licensee conducts business without a new license as a result of a change of legal entity, it may, within 120 days of the change, upon a showing of no substantial change in financial resources and liabilities, petition the director to grant a new license retroactive to the first day of the month during which the change occurred, and the director may grant the license with retroactive effect upon a finding that doing so would be consistent with the purposes of this chapter. Upon granting the petition, the director shall (1) require the licensee to pay an additional fee in an amount that will cover the expenses of the department in the matter, but not to exceed the fee for a new license, (2) place conditions on the license that are consistent with the purposes of this chapter as the director deems appropriate, and (3) require the licensee to pay an amount, for deposit in the Farm Products Trust Fund, equal to the amount that would have been required had the license been obtained in accordance with subdivision (b).
Added by Stats. 1991, Ch. 733, Sec. 2.
(a)If the Secretary of State suspends the corporate status of any licensee or if the corporate status is forfeited, the license is revoked by operation of law. The former licensee shall provide written notice of the suspension or forfeiture to the director, and to each person with whom it has a farm product contract, within 15 days of the date the Secretary of State mails the notice of suspension or forfeiture.
(b)The former licensee, may, upon a showing of no substantial change in financial resources and liabilities, and within 90 days of the suspension or forfeiture of corporate status, petition the director for an order to reissue its license formerly held under this chapter. If the corporate status has been reinstated by the Secretary of State, the director may reissue the license if the director finds that doing so would be consistent with the purposes of this chapter. As a condition to reissuing the license, the director may (1) require the former licensee to undertake such financial guarantees, including the filing and maintaining bonds, as the director deems necessary to protect the interests of contracting parties, and (2) impose conditions on the license that are consistent with the purposes of this chapter as the director deems appropriate.
Amended by Stats. 2000, Ch. 768, Sec. 1. Effective January 1, 2001.
(a)Each application shall state all of the following:
(1)The full name of the applicant.
(2)If the applicant is a firm, exchange, association, or corporation, the full name of each member of the firm or the names of the officers of the exchange, association, or corporation.
(3)The principal business address of the applicant in this state.
(4)The name of every person who is authorized to receive and accept service of summons for the applicant.
(5)A release authorizing the department, during consideration of the application and for the duration of licensure, to have access to and obtain financial information from both of the following:
(A)The applicant’s files with credit reporting agencies.
(B)The applicant’s files with banks, savings and loan associations, or any other financial institutions with whom the applicant has done business in the past or with whom the applicant intends to do business during the year of licensure.
(6)A notice signed by the applicant or the applicant’s representative that the department may obtain criminal record information during the course of a licensing investigation or upon presentation with a reasonable basis to believe the licensee has been convicted of a crime. An applicant whose application is incomplete shall be given written notice that a failure to complete the application within 60 calendar days shall result in denial of the application.
(b)The documents and information procured pursuant to this section shall be considered the records of a consumer and shall not be construed to be a public record. The documents and information shall remain confidential, except in actions brought by the department to enforce this division, or as a result of the issuance of a subpoena in accordance with Section 1985.4 of the Code of Civil Procedure. The unauthorized release of the documents received from the Department of Justice or the information contained in those documents, is a misdemeanor.
Amended by Stats. 1996, Ch. 620, Sec. 2. Effective January 1, 1997.
In addition to the other requirements of this chapter, each application for a license, except for an application for a cash buying processor license, shall include an affidavit in which the applicant affirms that he or she is current in making all payments required under undisputed contract agreements, and that he or she will do all of the following:
(a)Abide by all provisions of this chapter and Chapter 7 (commencing with Section 56101).
(b)Prepare and retain financial records adequate to document all transactions with suppliers.
(c)Prepare and retain current financial information, including, but not limited to, profit and loss statements and a balance sheet that presents fairly the financial condition as of the end of the applicant’s most recent fiscal year.
The affidavit shall be on a form prescribed by the secretary and shall be submitted under penalty of perjury.
Amended by Stats. 1996, Ch. 620, Sec. 3. Effective January 1, 1997.
Any balance sheet or financial information prepared, retained, or submitted as required by this chapter that shows the applicant to be in an unsound financial condition that impairs the ability to pay farm products creditors in full for farm products received or handled is sufficient grounds to deny the application for license or the renewal of a license. The denial of the application for a license or renewal of a license relating to an unsound financial condition shall include a notice and an opportunity for a hearing.
Amended by Stats. 2012, Ch. 465, Sec. 1. (AB 907) Effective January 1, 2013.
(a)If the secretary is not satisfied that an applicant or licensee is financially responsible, the secretary may, in lieu of denying, suspending, or revoking the license, accept an irrevocable guarantee of the obligations of the licensee to all California farm product creditors. The irrevocable guarantee may include a personal or corporate guarantee, a certificate of deposit, a bank letter of credit, or a surety bond, as determined to be appropriate by the secretary, and
shall be in an amount that is at least sufficient to pay for the licensee’s obligations at the time the guarantee is issued. The guarantee shall be for any period, in any form, and in any amount that the secretary may, from time to time, require. The secretary may, as a condition of accepting and maintaining the guarantee, require the guarantor to supply financial information to the secretary at times and to the extent the secretary deems advisable.
(b)A
guarantee placed with the secretary
pursuant to subdivision (a) shall support an action in a court of competent jurisdiction by a farm products creditor for obligations of the licensee to the creditor and by a state officer for the obligations of the licensee to the state related to transactions subject to the guarantee.
(c)An irrevocable guarantee accepted by the secretary pursuant to this section shall not operate as a release for purposes of Section 55637.
Amended by Stats. 1996, Ch. 620, Sec. 4. Effective January 1, 1997.
If at any time the secretary has cause or reason to believe that any applicant or licensee is in an unsound financial condition so as to impair his or her ability to pay farm products creditors in full for farm products received or handled, or for any reason the secretary deems advisable, the secretary may require an applicant or licensee to file with him or her a balance sheet or statement of financial position that presents fairly the financial condition of the licensee. The financial statement, if not prepared by a public accountant or certified public accountant, shall be on a form prescribed by the secretary and shall be submitted under penalty of perjury. Any balance sheet submitted that does not provide the information required by the secretary may be rejected until the information is provided.
Amended by Stats. 1996, Ch. 620, Sec. 4.5. Effective January 1, 1997.
Failure to file a financial statement as required by this chapter or to comply with the affidavit requirements of Section 55523.1 is a violation of this chapter.
Amended by Stats. 1996, Ch. 620, Sec. 5. Effective January 1, 1997.
Any financial statement submitted to the secretary pursuant to this chapter is confidential and shall not be divulged except at a hearing before the secretary or under subpoena, if necessary, for the proper determination of any court proceedings.
Repealed and added by Stats. 1997, Ch. 696, Sec. 19. Effective January 1, 1998.
The department shall accept or deny an application within 90 calendar days of receipt of a completed application. The department may deny, condition, suspend, or revoke a license issued pursuant to this chapter upon any of the following grounds and in the manner provided in this chapter:
(a)Upon one flagrant violation, as determined by the department, or repeated violations, by the holder or applicant, of any one or combination of the sections of this division or under any one or combination of the regulations promulgated by the department under the authority of this division.
(b)Upon one flagrant violation, as determined by the department, or repeated violations, by a holder’s or applicant’s agent, employee, or contractor, or of an organization or entity in which the holder or applicant holds a significant financial interest, of any one or combination of the sections of this division or any one or combination of the regulations promulgated under this division under circumstances where the holder or applicant knew or should have known and failed to take reasonable measures to prevent the violation or failed to report the violation to the department on learning of the violation.
(c)On the conviction of the holder or applicant of a crime that includes as one of its elements the financial victimization of another person. However, if the licensee was licensed prior to January 1, 1998, and the department knew of, or was on notice of, the conviction, that conviction may not form the basis of a discipline under this subdivision.
(d)On the grounds of a false or misleading statement by a holder or applicant that the holder or applicant knew or should have known to be false or misleading, directed to any official of any government concerning the scope of any indicia of authority, including, but not limited to, the holder’s or applicant’s license associated with the holder’s or applicant’s business, the standards under which the indicia was authorized, the contents of the application for licensure, or the holder’s or applicant’s relationship to the indicia.
(e)On the grounds that a holder or applicant, or a holder’s or applicant’s agency, employee, or contractor, or an organization or entity in which a holder or applicant holds a significant financial interest, deceived a grower in any material matter. Deception, for purposes of this subdivision, does not require scienter, but requires active misrepresentation where the actor knew the representation to be false or where the actor should have known, with due consideration, that he or she did not know whether or not the representation was true or false.
Added by Stats. 1997, Ch. 696, Sec. 20. Effective January 1, 1998.
(a)The Legislature finds there to be a substantial nexus between the conduct specified in Section 55524 and an applicant’s or holder’s fitness for licensure.
(b)The department shall not dismiss an action where a violation, however minor, has been established. The department shall not dismiss an action because the applicant or holder establishes factors in mitigation.
(c)However, the department may impose discipline other than denial or revocation of the license. As an alternative to revocation of a license, the department may stay a revocation subject to terms for a period of probation. As an alternative to denial the department may issue a license subject to conditions. Terms of probation or terms of conditional licensure may include, but are not limited to, a requirement of restitution, payment for extra audits, immediate revocation on a new violation, or any other terms that respond to the particular violations or circumstances found.
(d)Once a finding of a violation has been made, the department may consider the following factors in assessing the appropriate level of discipline:
(1)The relative isolation or infrequency of the conduct.
(2)Whether the conduct was a part of a pattern or practice.
(3)Whether the actor had been warned before.
(4)Whether the actor considered the consequences of the conduct.
(5)Whether the actor reasonably relied on others.
(6)The severity of the consequences.
(7)The mens rea of the actor.
(8)In the case of a criminal conviction, evidence of rehabilitation.
(9)The total licensing history.
(e)The following factors shall not be considered in assessing the appropriate level of discipline:
(1)The social or economic contributions of the applicant or holder.
(2)General testimonials as to good character and worthiness to be licensed.
(3)Economic hardship on the licensee.
(4)“Mercy of the court” pleas in connection with criminal convictions, pattern or practice violations, or deception.
(5)In the case of a felony criminal conviction, the department shall not consider rehabilitation unless the convicted person has a valid certificate of rehabilitation.
Added by Stats. 1997, Ch. 696, Sec. 21. Effective January 1, 1998.
(a)If an application for a license indicates, or the department determines during the application review process, that the applicant was issued a license that was revoked within the preceding two years, the department shall cease any further review of the application until two years have elapsed from the date of the revocation. The cessation of review shall not constitute a denial of the application for the purposes of this chapter, or any other provision of law.
(b)If an application for a license indicates, or the department determines during the application review process, that the applicant had previously applied for a license and the application was denied within the last year, the department shall cease further review of the application until one year has elapsed from the date of the notification of the denial or from the effective date of the decision and order of the department upholding a denial. The cessation of review shall not constitute a denial of the new applicant for purposes of this chapter, or any other provision of law.
(c)Nothing in subdivision (a) or (b) prohibits the department from taking into account the basis for denial or revocation in considering any new application subsequent to the elapse of the applicable period of prohibition.
Amended by Stats. 1997, Ch. 696, Sec. 22. Effective January 1, 1998.
The applicant shall satisfy the department of the applicant’s character, responsibility, and good faith in seeking to carry on the business that is stated in the application.
Amended by Stats. 2012, Ch. 465, Sec. 2. (AB 907) Effective January 1, 2013.
(a)The withdrawal of an application for a license after it has been filed with the department does not deprive the department of its authority to institute or continue a proceeding against the applicant or to enter an order denying the license, unless the department consents in writing to the withdrawal.
(b)The expiration or forfeiture by operation of law of a license, or its forfeiture or cancellation by order of the department or by order of a court of law, or its surrender without the written consent of the department, does not deprive the department of its authority to institute or continue a disciplinary proceeding against the holder upon
any ground provided by law or to enter an order revoking the license or otherwise taking disciplinary action against the holder.
(c)Any action brought by the department against an applicant or holder does not abate by reason of the sale or other transfer of ownership of the business that is a party to the action, except with the written consent of the department.
(d)Nothing in this division or in any other provision of this code deprives the department of the authority to settle or adjudicate a disposition of a case other than by revocation or denial. The department or the department’s designee may compromise with the applicant or holder in a written stipulation and order. The department may, following a hearing, order probation on terms and conditions as determined by the
department. The authority conferred by this subdivision shall include, but is not limited to, the authority to order payment of amounts determined owing to California farm product creditors, the authority to dismiss an action on the department’s own initiative, the authority to order administrative penalties, the authority to order a respondent to pay
for heightened audit scrutiny, the authority to suspend a license for a period of years, or any combination of remedies other than final revocation or denial of a license.
Amended by Stats. 1987, Ch. 662, Sec. 9.
Any person who is adjudicated liable for payment of a claim for farm products which arose out of the conduct of a business licensed or required to be licensed under this chapter or Chapter 7 (commencing with Section 56101), and who has not made full settlement with all producer-creditors, shall not be licensed by the director as a principal for four years from the date of the adjudication.
Amended by Stats. 2013, Ch. 76, Sec. 69. (AB 383) Effective January 1, 2014.
(a)Licensees or applicants for a license shall be required to furnish and maintain an irrevocable guarantee in a form and amount satisfactory to the secretary if, within the preceding four years, the secretary determines that they have done any of the following:
(1)Engaged in conduct which demonstrates a lack of financial responsibility, including, but not limited to, delinquent accounts payable, judgments of liability, insolvency, or bankruptcy.
(2)Failed to assure future financial responsibility unless an irrevocable guarantee is provided.
(3)Otherwise violated this chapter which resulted in license revocation.
(b)The irrevocable guarantee may include a personal or corporate guarantee, a certificate of deposit, a bank letter of credit, or a surety bond, as determined to be appropriate by the secretary.
(c)The guarantee shall not be less than ten thousand dollars ($10,000) or 20 percent of the annual dollar volume of business based on farm product value returned to the grower, whichever is greater, as assurance that the licensee’s or applicant’s business will be conducted in accordance with this chapter and that the licensee or applicant will pay all amounts due farm products creditors.
(d)The secretary, based on changes in the nature and volume of business conducted by the licensee, may require an increase or authorize a reduction in the amount of the guarantee, but in no case shall the guarantee be reduced below ten
thousand dollars ($10,000). A licensee who is notified by the secretary to provide a guarantee in an increased amount shall do so within a reasonable time as specified by the secretary. If the licensee fails to do so, the secretary may, after a notice and opportunity for a hearing, suspend or revoke the license of the licensee.
Repealed and added by Stats. 1997, Ch. 696, Sec. 27. Effective January 1, 1998.
(a)The department shall notify the applicant or holder in writing of the department’s decision to bring charges to deny or revoke a license.
(1)The notice shall inform the applicant or holder of the charges against him or her, of the department’s proposed disciplinary action, and of his or her rights under this chapter.
(2)The notice shall be served by certified mail to the applicant’s or holder’s last known address.
(3)The notice shall be mailed to the applicant or holder at least 30 calendar days in advance of the impending action.
(b)The department’s proposed action shall become final unless the applicant or holder appeals prior to the end of the notice period by submitting a notice of defense to the department in a form specified by the department. The notice shall be transmitted to the department in a form that is written, including, but not limited to, by facsimile.
(c)If the department receives a timely notice of defense, the department shall schedule a hearing within 90 calendar days of receipt of the notice of defense. Pending the final decision at the conclusion of the hearing, a revocation shall be stayed.
(d)Proceedings for the revocation or denial of a license issued under this chapter shall be conducted by hearing officers appointed for that purpose by the department. The department may elect to use hearing officers employed by the Office of Administrative Hearings. The hearing officers shall be independent of the Market Enforcement Bureau, but may be employees of the department. The hearing officers shall be qualified administrative law judges.
(e)Proceedings shall be conducted generally in accordance with the provisions of Chapters 4.5 (commencing with Section 11400) and 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code. However, proceedings need not conform strictly to any “rules of court” adopted as regulations by the Office of Administrative Hearings to guide the conduct of hearings conducted by the Office of Administrative Hearings. The department has all power granted by Chapters 4.5 (commencing with Section 11400) and 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code.
(1)The sole parties to the proceedings shall be the department and the applicant or holder. Third party intervention shall not be permitted. The disputes, claims, and interests of third parties shall not be within the jurisdiction of the proceedings. However, nothing in this paragraph prohibits any interested party from submitting an amicus brief if the hearing officer requests written briefs.
(2)The validity of a department regulation or order shall not be within jurisdiction of the proceedings.
(3)Law and motion matters shall be handled by the assigned hearing officer.
(4)The hearing officer may not enter into settlement discussions.
(5)The hearing officer may not issue sanctions.
(f)In all proceedings conducted in accordance with this section, the standard of proof to be applied is the preponderance of the evidence. When the department seeks to revoke an existing license, the department shall have the burden of proof and the burden of producing evidence.
(g)Decisions following a hearing shall be adopted by the department or the department’s designee and become final unless remanded for reconsideration or alternated in accordance with Chapters 4.5 (commencing with Section 11400) and 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code.
(h)The department shall maintain a library of decisions that shall be made available to any person, including the parties to administrative actions during discovery.
Enacted by Stats. 1967, Ch. 15.
Each licensed processor shall post his license, or a copy of it, in his office or salesroom in plain view of the public.