Before DUFFY, SCHNACKENBERG and CASTLE, Circuit Judges.
This is a petition to set aside or modify an order issued by the Judicial Officer of the Department of Agriculture,*fn1 in a proceeding under section 203 of the Packers and Stockyards Act, 7 U.S.C.A. § 193.
The Judicial Officer found and concluded that Swift & Company purchased livestock in violation of sections 202 and 401 of the Packers and Stockyards Act (7 U.S.C.A. §§ 192 and 221) and the regulations in effect pursuant to the Act.
The order directed Swift & Company to 1) cease and desist from such illegal practices; and 2) to prepare and keep for at least six months, full and complete records of the weights used in the purchase of livestock at its buying stations including computations and allocations of "shrink."
The complaint contained eleven charges involving livestock buying or record-keeping practices at petitioner's Neuhoff Division, Nashville, Tennessee, each with respect to one or more species of livestock at one or more locations in Tennessee, Alabama, Mississippi and Kentucky. Six of the charges were disposed of in petitioner's favor. As to the remaining five charges, the Judicial Officer found violations of the Act by petitioner.
The first four paragraphs of the order relate to four livestock buying practices which were found to be unfair. The fifth paragraph relates to the failure to keep certain livestock buying station records for at least six months. The entire order applies to all species of livestock and to petitioner's livestock buying and recordkeeping operations at all of its plaints and divisions throughout the United States.
Petitioner denies that the buying practices complained of by the Secretary were unfair or in violation of the Packers and Stockyards Act. It contends that the administrative order applying nationwide with reference to all species of livestock was unreasonable and excessively broad and should be modified. It also lays great emphasis on its contention that it was denied procedural due process in that it did not receive a fair hearing. Petitioner urges the entire order should be set aside because of the alleged failure of due process.
Under the Packers and Stockyards Act, whenever the administrative agency has reason to believe that a racker has violated or is violating the Act, the agency shall serve on the packer a complaint stating the charges and requiring the packer to attend and testify at an administrative hearing. At this hearing, the packer has a right of cross examination and also the right to be heard in person or by counsel and through witnesses.
Due process in an administrative hearing, of course, includes a fair trial, conducted in accordance with fundamental principles of fair play and applicable procedural standards established by law. In Morgan v. United States, 304 U.S. 1, 22, 58 S. Ct. 773, 82 L. Ed. 1129, the Court said: "As the hearing was fatally defective, the order of the Secretary (of Agriculture) was invalid."
Petitioner claims it was denied access to government records which it claims were necessary for a full cross examination of Paschal O. Drake, a government investigator in charge of the precomplaint investigation of livestock buying practices in the Nashville area. He was permitted to testify generally as to what was "learned and heard" during these investigations. The hearing examiner accepted this testimony as "background." The Judicial Officer held such testimony had "no probative value" and was not relied upon in support of his findings, conclusions and decision.
Petitioner further claims witnesses were heard out of order; that government investigators were permitted to testify to what subsequently heard government witnesses had told them during precomplaint interviews, and that such testimony was admitted and considered except to the extent "not otherwise corroborated." Also, that the transcript of the sworn statements of certain of petitioner's employees taken in the precomplaint investigation was admitted into evidence and was considered by the examiner and Judicial Officer.
The strict common law rules of evidence do not apply to administrative hearings. In Yiannopoulos v. Robinson, 7 Cir., 247 F.2d 655, this Court stated at page 657: "* * * [The] strict common law rules of evidence do not apply to an administrative hearing and that the admission of incompetent and irrelevant matter is not reversible error, if there is substantial evidence to sustain the decision of the agency."
Again, in Rhodes Pharmacal Company v. Federal Trade Commission, 7 Cir., 208 F.2d 382, this Court pointed out that evidence that would be excluded in an ordinary lawsuit may, under many circumstances, be ...