Bon Supermarket & Deli v. U.S.

• Decision Date: 06 March 2000
• Docket Number: No. 4:99CV71.,4:99CV71.
• Citation: 87 F.Supp.2d 593
• Court: U.S. District Court — Eastern District of Virginia
• Parties: BON SUPERMARKET & DELI, Ton Im and Chong Im, co-owners, Plaintiffs, v. UNITED STATES of America, Defendant.

87 F.Supp.2d 593

BON SUPERMARKET & DELI, Ton Im and Chong Im, co-owners, Plaintiffs, v. UNITED STATES of America, Defendant.

No. 4:99CV71.

United States District Court, E.D. Virginia, Newport News Division.

March 6, 2000.

COPYRIGHT MATERIAL OMITTED

Larry D. King, Newport News, VA, for plaintiffs.

Kent P. Porter, Assistant U.S. Attorney, United States Attorney's Office, Norfolk, VA, for defendant.

OPINION AND FINAL ORDER

REBECCA BEACH SMITH, District Judge.

Plaintiffs brought suit in this court challenging the decision of the United States Department of Agriculture, Food and Nutrition Services ("FNS"), to disqualify Bon Supermarket & Deli ("Bon") from participation in the federal food stamp program, as outlined by the Food Stamp Act, 7 U.S.C. § 2011-2036 (1994). This matter comes before the court on defendant's motion for summary judgment.¹ For the reasons set forth below, the motion for summary judgment is GRANTED.

I. Factual and Procedural Background²

Bon Supermarket & Deli, located in Hampton, Virginia, is co-owned by plaintiffs Ton Im and Chong Im. In 1991, Bon was approved for participation in the food stamp program, and was subsequently reauthorized as a suitable vendor in 1993. In February, 1996, the United States Department of Agriculture, Office of Inspector General (USDA, OIG), initiated an investigation of Bon and the Ims based upon information received from the Virginia Department of Alcoholic Beverage Control that food stamp recipients were exchanging food stamps for alcohol.

Between February 22, 1996, and March 12, 1996, the USDA, OIG conducted an investigation of Bon and its employees' compliance with the rules and regulations governing participation in the food stamp program. On February 22, 1996, Special Agent Joseph S. Johnson of the Virginia Department of Alcoholic Beverage Control, provided a female working under his supervision $205.00 in food stamps and asked her to try to sell the food stamps for him at Bon in exchange for a six-pack of Zima malt liquor. The female entered Bon and approached an employee working behind the counter, showed the employee the four books of food stamps, and then went to a cooler to retrieve the six-pack of Zima. The female returned to the counter and gave four books of food stamps to the employee. The employee rang up the sale and gave $104.00 cash in change which the female turned over to Agent Johnson after leaving Bon. The female was observed at all times during the transaction by Agent Johnson.

On March 6, 1996, Agent Johnson provided the same female involved in the February 22, 1996, transaction $205.00 in food stamps and asked her to try to sell the food stamps for him at Bon in exchange for cash, without any additional purchase. The female entered Bon, went to the counter, approached the same employee involved in the February 22, 1996, transaction, and gave him four books of food stamps. The employee was observed opening the register, placing the food stamps inside, and then handing the female $110.00 in cash, which she turned over to Agent Johnson upon leaving Bon.

A little less than a week later, on March 12, 1996, Agent Johnson provided the same female involved in the two prior controlled transactions $220.00 in food stamps. Again, the female was asked only to attempt to sell the food stamps in exchange for cash, without any additional purchase. The female entered Bon and approached the same clerk involved in the two previous controlled transactions. The female gave the clerk the food stamps and received $115.00 in cash from the clerk in return.

On March 24, 1996, three felony warrants of arrest were issued for Ton Im, Bon's co-owner, for unauthorized use of food stamps in violation of Virginia Code § 63.1-124³ in relation to the February 22, 1996, March 6, 1996, and March 12, 1996, transactions described above. The charges were reduced to misdemeanors pursuant to a plea agreement, on October 26, 1998, and Tom Im entered "Alford Pleas"⁴ on all three counts in the General District Court for the City of Hampton.

On January 12, 1999, FNS issued an administrative charge letter charging Bon with "trafficking" food stamps — selling ineligible items in exchange for food stamps and accepting food stamps in exchange for cash, in violation of 7 C.F.R. § 278.2(a). Plaintiffs were advised that they were being considered for permanent disqualification from the food stamp program because of the seriousness of the charges. Furthermore, plaintiffs were told that they could respond, either orally or in writing, to the charges by "providing any information, explanation, or evidence" to the officer-in-charge within ten days of receipt of the letter.

In the same letter, plaintiffs were advised that they may be eligible for a civil monetary penalty in lieu of permanent disqualification. FNS explained that such a request must be submitted, along with supporting evidence that the store had an effective policy and program to prevent trafficking pursuant to 7 C.F.R. § 278.6(i), within ten days after the store received the charge letter indicating that FNS was considering disqualification.

Two days after receiving the letter, on January 14, 1996, Ton Im, one of Bon's coowners and a plaintiff herein, contacted the officer-in-charge, Katrina Ward, and explained that he did not know what happened, and that, furthermore, he did not commit the violation. Thereafter, on February 4, 1999, plaintiffs, through their attorney, responded to the charge letter denying the trafficking allegations on behalf of Mr. Im. Furthermore, the attorney argued that Mr. Im wanted to "keep his options open for continued participation" in the food stamp program, and requested an "opinion regarding a civil penalty." (Statement of Fact ¶ 12). No additional evidence concerning the violations was tendered. However, plaintiffs never made a formal request for, nor did they timely submit documentation as required by 7 C.F.R. § 278.6(i) for, a civil monetary penalty to be considered in lieu of permanent disqualification. After reviewing the evidence before it, the FNS ultimately determined that the trafficking violations set forth in the charge letter of January 12, 1999, had indeed occurred. On February 16, 1999, FNS advised plaintiffs that Bon was to be permanently disqualified from the food stamp program, since no documented request for a civil monetary penalty had been received.

Plaintiffs timely appealed the disqualification determination made by the food stamp review officer to the Administrative Review Division of the FNS. Plaintiffs offered no specific evidence to rebut the trafficking allegations other than a flat denial of the charge, nor did they raise any issue concerning whether they were entitled to, or should have been issued, a civil monetary penalty in lieu of disqualification, other than to note that they had "other employees" and "tried to monitor their conduct and behavior to comply with all applicable laws, including the food stamp regulations." (Statement of Facts ¶ 14).

On March 18, 1999, Patrick Frank, administrative review officer, acknowledged receipt of plaintiffs' request for review, and also scheduled an April 8, 1999, meeting to provide the opportunity to present any additional evidence or information which plaintiffs felt was pertinent to their case. After meeting with the plaintiffs, conducting a full review of the USDA investigation and prior administrative findings, and reviewing plaintiffs' attorney's original response to the charge letter, on May 4, 1999, the review officer upheld the permanent disqualification recommendation.

On June 4, 1999, plaintiffs, Bon Supermarket & Deli and Ton Im and Chong Im, its co-owners, filed this action pursuant to 7 U.S.C. § 2023(a)(13), seeking judicial review of the decision by FNS to disqualify plaintiffs from participation in the food stamp program. Plaintiffs contend that the agency actions are unlawful, and should be set aside by the reviewing court on the following grounds: (1) defendant's action is in excess of statutory authority because there is no statutory nor evidentiary basis to deny plaintiffs their rights to continue in the food stamp program; (2) defendant's acts are arbitrary, capricious and a denial to plaintiffs of the equal application of the law; and (3) the withdrawal of authorization is a denial of the plaintiffs' due process rights, in that there is no rational basis in the law for such actions.⁵

Defendant filed the instant motion to dismiss or, in the alternative, for summary judgment on October 5, 1999. No response to the motion was received from plaintiffs, and the time for filing a response has long elapsed.⁶ On November 1, 1999, the parties were notified by letter from the Clerk that the motion for summary judgment was being referred to the undersigned judge for decision.⁷ Accordingly, the matter is ripe for review.

II. Standards of Review

A participant store may obtain judicial review of a final determination by the FNS, as upheld by the administrative review officer, by filing suit against the United States in district court within thirty days after the delivery of the final notice of determination. See 7 U.S.C. § 2023(a)(13); 7 C.F.R. § 279.10. The suit in "the United States district court ... shall be a trial de novo by the court in which the court shall determine the validity of the questioned administrative action in issue." 7 U.S.C. § 2023(a)(15). The scope of review in an action brought pursuant to 7 U.S.C. § 2023(a)(13) is significantly beyond the scope of review available under the general provisions of the Administrative Procedure Act, see Cross v. United States, 512 F.2d 1212, 1216 (4th Cir. 1975), as the district court reviews de novo whether a violation of the Food Stamp Act occurred. However, the court's review of the sanction imposed by the FNS is strictly cabined — the court only determines whether the agency's sanction was arbitrary and capricious. See id. at 1218. Thus,...