Cass Corridor Food Coop v. United States
| Decision Date | 15 April 1981 |
| Docket Number | Civ. A. No. 79-70679. |
| Citation | 512 F. Supp. 925 |
| Parties | CASS CORRIDOR FOOD COOP et al., Plaintiffs, v. UNITED STATES of America, Defendant. |
| Court | U.S. District Court — Western District of Michigan |
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R. F. Gillett, Center for Urban Law, Detroit, Mich., for plaintiffs.
Brian Kennedy, Dept. of Justice, Washington, D. C., for defendant.
This litigation involves the decision of the Department of Agriculture to disqualify Plaintiff Cass Corridor Food Coop (Coop) from participation in the Food Stamp Program. The Department determined that the Coop had accepted stamps on non-food items in violation of the Food Stamp Act, 7 U.S.C. § 2011 et seq., and imposed the sanction of disqualification.
The Coop contends that the penalty of disqualification should not have been applied. It is urged that amendments under the Food Stamp Act of 1977 should have been applied and that, had they been, a monetary penalty would have been imposed. The Government responds that the case was properly reviewed administratively under the regulation promulgated under the 1964 Act and that delay in promulgation of the regulations under the 1977 Act does not require the conclusion that the Coop was wrongly denied evaluation under the later legislation. These issues regarding which provisions should apply are the subject of the Government's Motion for Partial Summary Judgment presently before the court.
Also before the court is Plaintiffs' Motion to Amend Complaint and to Add Parties. The heart of this motion is the contention that individual Plaintiffs, other than the Coop itself, are entitled to challenge the Department of Agriculture's action disqualifying the Coop from food stamp participation and to challenge the failure of the Department to promulgate regulations sooner under the 1977 Act.
The Government does not dispute that under the 1977 Act a fine could have been imposed but that under the 1964 Act the penalty of disqualification was provided. Compare 7 U.S.C. § 2020 (1964) (amended 1977) with 7 U.S.C. § 2021 (1977). Furthermore, it cannot be disputed that there is a legislative preference under the 1977 Act for imposition of a civil penalty rather than disqualification. Addressing the provision for civil penalties in the 1977 Act, the House committee stated:
To deal with retailer abuse, the Committee bill calls for the addition of civil penalties of up to $5,000 as an alternative punishment to outright program disqualification or suspension, and, indeed, one that should normaly sic be imposed instead of disqualification (section 12). This would benefit all three major participants in the program — consumers, businesses and the Department itself. Consumers would not lose the convenience of nearby stores during a period of suspension. Businesses would not face the prospect of losing up to half of their business volume during a suspension period.... And the Department would not face the difficult choice between a very lenient punishment (a reprimand) and a very severe one (suspension) in those cases where something between those two is far more appropriate. Retail stores should not be disqualified simply because an owner, operator, employee, or member is a food stamp recipient in the absence of fraud or other illegal conduct.
H.R.Rep.No.95-345 at 397, reprinted in 1977 U.S.Code Cong. & Ad.News, 1704, 1941, 2326.
Relying on the preference for civil penalties embodied in the 1977 Act and the delay in promulgation of regulations implementing the 1977 Act, the Plaintiff Coop challenges its disqualification imposed under the provisions of the 1964 Act.
At the outset, it must be noted that the Sixth Circuit has ruled that the severity of a penalty imposed under the Act cannot be reviewed by the district court; only the validity of the administrative determination underlying the penalty may be reviewed. Martin v. United States, 459 F.2d 300 (6th Cir.), cert. denied, 409 U.S. 878, 93 S.Ct. 129, 34 L.Ed.2d 131 (1972); accord, Save More of Gary, Inc. v. United States, 442 F.2d 36 (7th Cir.), cert. dism'd, 404 U.S. 987, 92 S.Ct. 535, 30 L.Ed.2d 549 (1971); H.R.Rep.No.95-345, 1977 U.S.Code Cong. & Ad.News 1941, 2327. Recent cases have drawn on the standard of review of administrative penalties enunciated in Butz v. Glover Livestock Commission Co., 411 U.S. 182, 185-86, 93 S.Ct. 1455, 1457-58, 36 L.Ed.2d 142 (1973), which provides that the penalty will stand unless unwarranted in law or without justification in fact. Nowicki v. United States, 536 F.2d 1171, 1177-78 (7th Cir. 1976), cert. denied, 429 U.S. 1092, 97 S.Ct. 1103, 51 L.Ed.2d 537 (1977); Kulkin v. Bergland, 626 F.2d 181, 184-85 (1st Cir. 1980). It has been suggested that the Sixth Circuit, in Martin, actually intended to apply a similar very limited scope of review, though the Martin case admittedly states that there is a jurisdictional bar to consideration of the penalty. See Kulkin, 626 F.2d at 185 n.7. The instant case does not require resolution of the question of the exact intent of the Sixth Circuit in Martin, for there is no indication of facts to support review of the penalty if the Department of Agriculture applied the correct act in assessing the penalty. The issue framed is a narrow one: whether the Defendant legally applied the 1964 Act in completing review of the Coop's case and in assessing a penalty. If so, the disqualification will stand. If not, the appropriate course of action will be to remand to the Department for application of the correct law and reconsideration of the penalty under the proper provisions. See Jedatt, Inc. v. United States, 488 F.Supp. 261, 266-67 (E.D.Mich.1980).
Plaintiffs argue that in applying the penalty provisions of the 1964 Act, the Defendant violated the congressional intent that the new Act take prompt effect. The implementation provision of the 1977 Act provides, in Section 1303:
Pub.L. 95-113, § 1303; 7 U.S.C.A. § 2011, note (Supp.1980). Under this provision, Plaintiffs contend, any proceeding pending after October 1, 1977, is intended to be reviewed under the new Act. Defendant responds that the language evidences a clear intent to retain the regulations under the 1964 Act until new regulations are promulgated under the 1977 Act. Reading Paragraphs (a) and (b) together, it is reasonable to understand 1303 to accord with Defendant's position that the 1964 regulations would govern until superseded and thereafter would govern proceedings pending at the time the new regulations took effect. See Kulkin v. Bergland, 626 F.2d 181, 187 (1st Cir. 1980).
Plaintiffs meet this conclusion by contending that even if the implementation provision is properly read to support the Defendant's position, that provision cannot be read in isolation. It was enacted with the expectation that the Act would be implemented long before it in fact was. Therefore, Plaintiffs would have the court look behind the implementation provision as a means to effect the perceived congressional intent that the 1977 Act be promptly implemented. They stress that the Act was to be implemented, "as expeditiously as possible consistent with the efficient and effective administration of the food stamp program," Pub.L. 95-113, § 1303, supra, and that "final regulations would be issued by March 1, 1977 sic, 1978(?)," though it was acknowledged that the March date was "somewhat optimistic." H.R.Rep.No.95-345 at 427, reprinted in 1977 U.S.Code Cong. & Ad.News 1941, 2355. Further, the anticipated repeal date of the 1964 Act was July 1, 1978, in order to allow time for promulgation of the necessary regulations. Id. 2351. Accordingly, they contend that the failure of the Department expeditiously to implement the regulations vitiates Section 1303 and compels the conclusion that the new regulations should have been applied in this case.
The following chronology is pertinent:
October 1, 1977 Effective date of 1977 Act
October 11, 1977 First alleged violation by Coop
March 1, 1977 "Optimistic" date for issuance of
final regulations under 1977
Act
May 30, 1978 Charge letter sent to Coop
June 26, 1978 Charge letter received by Coop
July 1, 1978 Repeal of 1964 Act
August 15, 1978 Decision of District Director disqualifying
Coop
September 22, 1978 Final regulations published
January 1, 1979 Effective date of regulations
February 9, 1979 Final decision of U.S.D.A. upholding
disqualification
Plaintiffs contend that the matter was not pending until August 15, 1978. However, the latest date at which the matter could fairly be considered pending is June 26, 1978, when the Coop received notice, although I conclude that the date of mailing of the charge (in effect, the date of filing of the charge) is the date when the matter became pending. Cf...
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Prunty v. US DEPT. OF AGR., FOOD & NUTRITION SER.
...of Agriculture, 381 F.Supp. 1021 (M.D.Tenn.1974), affirmed without opinion, 516 F.2d 901 (6th Cir.1975); Cass Corridor Food Coop. v. United States, 512 F.Supp. 925 (E.D.Mich. 1981). Defendant, the United States Department of Agriculture, Food & Nutrition Service (FNS) argues that the Sixth ......